Using an unlevered Free Cash Flow to Firm (FCFF) model, we project CenterPoint Energy, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.5% to 4.6% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 57, DPO 82, DIO 52). At a 5.7% WACC with mid-year discounting, the terminal value (90% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 13.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $124.97 per share, suggesting CNP is undervalued by 194.6% at the current price of $42.42.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,518 | 2,644 | 2,761 | 2,940 | 3,074 | 3,151 |
| (−) Net Interest | 777 | 816 | 852 | 907 | 949 | 972 |
| (+) D&A | 4,273 | 4,589 | 4,701 | 4,860 | 5,064 | 5,191 |
| EBITDA | 7,569 | 8,049 | 8,313 | 8,707 | 9,087 | 9,314 |
| (−) Tax | 438 | 459 | 480 | 511 | 534 | — |
| (−) CapEx | 4,741 | 4,978 | 5,198 | 5,535 | 5,788 | — |
| (−) ΔWC | 900 | 52 | 48 | 74 | 55 | — |
| Free Cash Flow (FCF) | 1,491 | 2,559 | 2,588 | 2,587 | 2,710 | — |
| Peers' EBITDA Multiple | 13.5x | |||||
| Terminal Value | 125,652 | |||||
| WACC / Discount Rate | 5.69% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,450 | 2,356 | 2,254 | 2,132 | 2,113 | 95,288 |
| Enterprise Value | 105,591 | |||||
| Projection Period | 10,304 | 9.8% | ||||
| Terminal Value | 95,288 | 90.2% | ||||
| (−) Current Net Debt | 23,614 | |||||
| Equity Value | 81,977 | |||||
| (÷) Outstanding Shares | 656M | |||||
| Fair Price | $125 | +194.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 9.5x | 11.5x | 13.5x | 15.5x | 17.5x |
|---|---|---|---|---|---|
| 3.7% | $93 | $117 | $140 | $164 | $188 |
| 4.7% | $87 | $110 | $132 | $155 | $178 |
| 5.7% | $82 | $103 | $125 | $147 | $168 |
| 6.7% | $77 | $97 | $118 | $138 | $159 |
| 7.7% | $72 | $92 | $111 | $131 | $150 |
Current price: $42.42. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.