Centrica share price: Analysts weigh in on latest results

Hargreaves Lansdown argues that Centrica’s (LON:CNA) warning on its cashflows is the ‘real story,’ Citywire has reported. The comments came after the British Gas owner posted its full-year results yesterday, disclosing that it expects the energy regulator’s price cap to impact its cash flow and earnings this year.

Centrica’s share price tumbled in the previous session, giving up 11.70 percent to close at 121.15p, weighing on the benchmark index which ended trading  0.85 percent lower at 7,167.39 points. The group’s shares have extended their slide in early trading this morning, having given up 1.98 percent to 118.75p as of 08:05 GMT, compared with a flat Footsie.

HL weighs in on Centrica’s results

Citywire quoted Hargreaves Lansdown analyst George Salmon as commenting yesterday that Centrica’s higher full-year profit were “just a function of the rising oil price’ and ‘the fact the group has had to warn investors about next year’s cashflows is the real story, and has potential to impact the dividend longer term”. The FTSE 100 group said yesterday that that the midpoint of its adjusted operating cash flow guidance in 2019 stands around £350 million lower than the 2018 result.

The analyst reckons that the British Gas owner’s dividend, which has been held at 12p, was ‘starting to creak,’ with the FTSE 100 group “increasingly relying on cost cutting and disposals to prop up the payment”.

“Neither can continue forever,” Salmon continued, adding that the broker wouldn’t be “surprised if a cut was around the corner”.

Other analysts on blue-chip group

Jefferies reaffirmed Centrica as a ‘hold’ yesterday, with a price target of 125p on the shares. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average valuation of 139.92p.

As of 08:24 GMT, Friday, 22 February, Centrica PLC share price is 121.15p.