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There's no doubt that investing in the stock market is a truly brilliant way to build wealth. But if you choose that path, you're going to buy some stocks that fall short of the market. Unfortunately for shareholders, while the CenterPoint Energy, Inc. (NYSE:CNP) share price is up 50% in the last year, that falls short of the market return. In contrast, the longer term returns are negative, since the share price is 7.5% lower than it was three years ago.
Check out our latest analysis for CenterPoint Energy
Given that CenterPoint Energy didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year CenterPoint Energy saw its revenue shrink by 2.6%. The lacklustre gain of 50% over twelve months, is not a bad result given the falling revenue. We'd want to see progress to profitability before getting too interested in this stock.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. If you are thinking of buying or selling CenterPoint Energy stock, you should check out this free report showing analyst profit forecasts.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of CenterPoint Energy, it has a TSR of 54% for the last year. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
CenterPoint Energy provided a TSR of 54% over the year (including dividends). That's fairly close to the broader market return. Most would be happy with a gain, and it helps that the year's return is actually better than the average return over five years, which was 6%. Even if the share price growth slows down from here, there's a good chance that this is business worth watching in the long term. It's always interesting to track share price performance over the longer term. But to understand CenterPoint Energy better, we need to consider many other factors. For example, we've discovered 3 warning signs for CenterPoint Energy (1 shouldn't be ignored!) that you should be aware of before investing here.