We Cut Centrica's FVE to GBX 100 and Anticipate a 50% Dividend Cut; Shares Fairly Valued
We cut our fair value estimate from GBX 140 to GBX 100 per Centrica share on a 20% average annual cut in our adjusted EPS through 2023 and in anticipation of a GBP 1 billion increase in the pension deficit. We maintain our no moat, stable trend ratings. We expect the 2019 dividend to be cut by 50% to GBX 6 versus a 25% cut previously, because of a sharper fall in 2019 operating cash flow. Our new dividend involves a yield of 6.9%, above the sector average of 5%, but with much higher business ris...Centrica is an energy and services company. Co.'s segment are: Energy Supply and Services, which supplies gas and electricity in the U.K. and North America; Connected Home, which supplies energy solutions and technologies to residential customers; Distributed Energy and Power, which supplies energy solutions, generation and technologies to commercial and industrial customers; Energy Marketing and Trading, which trades and optimizes energy; Exploration and Production, which produces and processes gas and oil and develops new fields; Central Power Generation, which generates power from combined cycle gas turbines, wind and nuclear assets; and Centrica Storage, gas storage in the U.K.
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