Centrica Share Price Forecast 2024, 2025, 2026, 2027, 20230 and Dividend Prediction
Centrica plc (LSE: CNA) is a leading international energy services and solutions company, headquartered in Windsor, United Kingdom. The company provides energy supply, services and solutions to over 10 million customers across the UK, Ireland and North America, through its trusted brands such as British Gas, Bord Gáis Energy and Centrica Business Solutions. In this article, we will look at Centrica Share Price Forecast 2024, 2025, 2026, 2027, 20230.
In this blog post, we will analyze Centrica stock from various perspectives, such as its dividend forecast, growth opportunity, competitors, strengths and weaknesses, SWOT analysis, financials, risks,, and key things to watch out for.
Consider reading: Rolls Royce Stock Price Prediction and Dividend Forecast
Page Contents
Centrica Share Price Forecast 2024, 2025, 2026, 2027, 2030
| Year | Minimum Price Target | Maximum Price Target | Average Price Target |
|---|---|---|---|
| 2024 | £1.88 | £2.25 | £2.06 |
| 2025 | £2.34 | £2.81 | £2.58 |
| 2026 | £2.93 | £3.52 | £3.22 |
| 2027 | £3.66 | £4.39 | £4.03 |
| 2028 | £4.58 | £5.49 | £5.04 |
| 2029 | £5.72 | £6.87 | £6.29 |
| 2030 | £7.15 | £8.58 | £7.87 |
| 2031 | £8.94 | £10.73 | £9.83 |
| 2032 | £11.18 | £13.41 | £12.29 |
Consider reading: Abrdn Share Price Prediction and Dividend Forecast
Centrica Share Price Live Chart and History
Centrica Share Price Forecast 2024
| Year | Minimum Price Target | Maximum Price Target | Average Price Target |
|---|---|---|---|
| 2024 | £1.88 | £2.25 | £2.06 |
The Centrica Share Price Forecast for 2024 predicts a minimum price target of £1.88, a maximum of £2.25, and an average of £2.06.
Centrica Share Price Forecast 2025
| Year | Minimum Price Target | Maximum Price Target | Average Price Target |
|---|---|---|---|
| 2025 | £2.34 | £2.81 | £2.58 |
The Centrica Share Price Forecast for 2025 anticipates a minimum price target of £2.34, a maximum of £2.81, and an average of £2.58.
Centrica Share Price Forecast 2026
| Year | Minimum Price Target | Maximum Price Target | Average Price Target |
|---|---|---|---|
| 2026 | £2.93 | £3.52 | £3.22 |
The Centrica Share Price Forecast for 2026 projects a minimum price target of £2.93, a maximum of £3.52, and an average of £3.22.
Centrica Share Price Forecast 2030
| Year | Minimum Price Target | Maximum Price Target | Average Price Target |
|---|---|---|---|
| 2030 | £7.15 | £8.58 | £7.87 |
The Centrica Share Price Forecast for 2030 suggests a minimum price target of £7.15, a maximum of £8.58, and an average of £7.87.
Consider reading: Woodbois Stock Price Prediction and Dividend Forecast
Centrica Dividend Forecast
Centrica, known for its practice of distributing dividends to shareholders, has also experienced instances of reducing these dividends. For the fiscal year concluding on December 31, 2022, Centrica declared a final dividend of 2.00 pence per ordinary share. This amount represents a decrease from the previous year’s dividend of 3.50 pence per share. This dividend was allocated to shareholders registered as of June 9, 2023, and disbursed on July 20, 2023.
This reduction in dividends primarily stemmed from the adverse effects of the Covid-19 pandemic on the company’s earnings and cash flow. Additionally, the need to focus on strategic investments and debt reduction played a significant role. Centrica has indicated a shift towards a progressive dividend policy, aiming to align future dividend growth with the expansion of earnings and cash flow.
Market analysts project that Centrica will offer a total dividend of 2.22 pence per share for the year ending December 31, 2023. This forecast suggests a dividend yield of 1.48%, based on the current share price of 150.90 pence. Looking ahead, the dividend is anticipated to increase by 11.0% in 2024 and by 9.9% in 2025, potentially reaching 2.72 pence and 2.99 pence per share, respectively.
The following table provides a concise summary of Centrica’s dividend projections for the upcoming three years:
| Year | Dividend per Share (Pence) | Dividend Growth (%) | Dividend Yield (%) |
|---|---|---|---|
| 2023 | 2.22 | 11.0 | 1.48 |
| 2024 | 2.47 | 11.3 | 1.64 |
| 2025 | 2.72 | 10.1 | 1.80 |
Consider reading: Barclays Stock Price Prediction and Dividend Forecast
Growth Opportunity for Centrica
Centrica has a number of growth opportunities in the energy market, as it aims to provide energy services and solutions that help its customers live sustainably, simply and affordably. Some of the key growth opportunities for Centrica are:
- Renewable Energy Generation: Centrica has a significant renewable energy portfolio including wind, solar, and biomass, totaling 1.1 GW. The company also plans to expand with 2.6 GW of new projects, including battery storage and wind farms. With an investment plan of £600m to £800m annually until 2028, Centrica is focusing on enhancing its renewable energy capacity.
- Security of Supply and Flexibility: The company operates the UK’s largest gas storage facility, the Rough Field, with a substantial capacity and deliverability rate. Centrica is also considering converting this facility for carbon storage and hydrogen production, which will enhance the UK’s energy security and system flexibility.
- Customer Engagement: Serving over 10 million customers in various regions, Centrica offers a range of energy services such as smart meters, energy efficiency, and electric vehicle charging. The company is enhancing customer experience through digital innovation and plans to invest in customer-focused activities to maintain its market position.
Competitors of Centrica Stock
Key Competitors of Centrica in the Energy Market
- SSE plc (LSE: SSE): A prominent energy company in the UK and Ireland, SSE is involved in electricity and gas generation, transmission, distribution, and supply, alongside energy-related services. It has a market capitalisation of £16.4 billion and offers a dividend yield of 4.77%.
- National Grid plc (LSE: NG): Operating in the UK and the US, National Grid is a utility company managing electricity and gas networks. It owns the electricity transmission network in England and Wales, the gas transmission network in Great Britain, and operates networks in the US. Its market capitalisation stands at £31.9 billion, with a dividend yield of 5.14%.
- ENGIE SA (EPA: ENGI): Based in France, ENGIE is a global player offering low-carbon energy, renewable power, gas, and various services and solutions, with a focus on energy efficiency, digitalisation, and decarbonisation. ENGIE’s market capitalisation is €33.8 billion, and it has a dividend yield of 3.57%.
Strengths of Centrica Stock
Centrica stock has several strengths that make it an attractive investment proposition. Some of the key strengths of Centrica stock are:
- Attractive Valuation: Centrica’s stock is characterized by a low price-to-earnings (P/E) ratio, at 5.2 for the current fiscal year and projected at 8.96 for 2024. This positions it as an appealing investment in terms of earnings multiples compared to its peers and the industry average. Additionally, its low enterprise value-to-sales (EV/Sales) ratio of 0.19 suggests the stock might be undervalued relative to its sales.
- Robust Cash Flow: The company has demonstrated a strong cash flow, generating £2.5 billion of free cash flow from continuing operations in 2022, an increase from the previous year. This is indicative of effective operational performance, cost efficiency, and capital discipline. The robust cash flow provides the flexibility for investment in growth, debt reduction, and shareholder dividends.
- Sales and Earnings Growth: Centrica has shown significant growth in sales and earnings. In 2022, the company reported a 120% increase in adjusted operating profit to £3.3 billion and a 751% increase in adjusted basic earnings per share to 34.9 pence. This growth trajectory is expected to continue, with analysts forecasting a 5.7% revenue increase and a 10.9% earnings increase for 2023.
Weaknesses of Centrica Stock
Centrica stock also has some weaknesses that could limit its performance and attractiveness. Some of the key weaknesses of Centrica stock are:
- Limited Growth Prospects: Centrica operates in a mature and highly competitive market, which poses challenges in expanding its customer base and market share. The company faces regulatory hurdles, such as the energy price cap in the UK, and environmental challenges, including the transition to a low-carbon economy and the net zero emissions target by 2050. These factors contribute to Centrica being perceived as one of the businesses with the lowest growth prospects in its industry.
- Earnings Volatility: The earnings of Centrica are subject to volatility due to exposure to fluctuating commodity prices, weather conditions, customer demand, and exchange rates. Additionally, earnings are impacted by one-off items like impairments, restructuring costs, disposals, and litigation. For example, in 2022, Centrica reported a statutory loss before tax of £1.1 billion, largely attributed to £1.5 billion in impairments related to its upstream and nuclear assets.
- Fragile Profit Margins: The company’s profitability, as indicated by its EBITDA margin, is relatively low compared to peers and the industry average. In 2022, Centrica’s EBITDA margin stood at 9.6%, which was lower than those of SSE, National Grid, and ENGIE. This indicates a weaker profitability position relative to its competitors.
SWOT Analysis of Centrica Stock
SWOT Analysis Summary for Centrica Stock:
Strengths
- Low Valuation: Centrica’s stock is characterized by a relatively low price-to-earnings ratio, indicating a potentially undervalued status compared to its industry peers.
- Positive Cash Flow: The company demonstrates strong cash flow, underlining its operational efficiency and financial health.
- Sales and Earnings Growth: Centrica has shown significant growth in sales and earnings, indicating robust business performance.
Weaknesses
- Low Growth Prospects: The company operates in a saturated and competitive market, limiting its potential for customer base and market share expansion.
- Earnings Volatility: Centrica’s earnings are susceptible to market fluctuations, influenced by factors like commodity prices and weather conditions.
- Fragile Margins: The company’s EBITDA margin is lower compared to some of its competitors, suggesting weaker profitability.
Opportunities
- Renewable Generation: Investments in renewable energy sources present significant growth opportunities.
- Security of Supply and Flexibility: Managing the UK’s largest gas storage facility, Centrica can leverage this for energy security and operational flexibility.
- Customers: Centrica’s large customer base across different regions offers opportunities for expanded services and solutions.
Threats
- Regulatory and Environmental Challenges: The energy sector is subject to stringent regulations and environmental targets, impacting business operations.
- Commodity Price Fluctuations: The volatility in commodity prices can affect profitability and operational costs.
- Competition from Bigger Players: Competing with larger, more established companies in the energy sector poses a significant threat.
Centrica Company Financials
Centrica exhibited a significant improvement in its financial performance in 2022, recovering from the challenges posed by the Covid-19 pandemic. Key highlights include:
- Revenue: In 2022, Centrica’s revenue was £22.7 billion, a slight decrease of 3% from £23.3 billion in 2021, primarily due to reduced volumes and prices in its retail and business segments.
- Adjusted Operating Profit: There was a substantial increase in adjusted operating profit, rising by 120% to £3.3 billion in 2022, fueled by higher commodity prices, enhanced customer service, and operational efficiency.
- Adjusted Basic Earnings Per Share: A remarkable growth was seen in adjusted basic earnings per share, which soared by 751% to 34.9 pence, reflecting increased operating profit and reduced finance costs.
- Free Cash Flow: The company generated a robust free cash flow from continuing operations of £2.5 billion in 2022, up by £1.3 billion from 2021. This increase was attributed to higher operating profit and reduced capital expenditure.
- Net Debt: Net debt was significantly reduced by £1.4 billion to £2.1 billion, aligning with the target range of £2 billion to £3 billion.
- Dividend: Despite a lower dividend of 2.00 pence per ordinary share in 2022 compared to 3.50 pence in 2021, this was in line with Centrica’s progressive dividend policy.
The table below summarizes key financial indicators for Centrica over the past three years:
| Indicator | 2020 (£ billion) | 2021 (£ billion) | 2022 (£ billion) |
|---|---|---|---|
| Revenue | 26.8 | 23.3 | 22.7 |
| Adjusted Operating Profit | 0.9 | 1.5 | 3.3 |
| Adjusted Basic Earnings Per Share (pence) | 3.8 | 4.1 | 34.9 |
| Free Cash Flow from Continuing Operations | 0.8 | 1.2 | 2.5 |
| Net Debt | 3.2 | 3.5 | 2.1 |
| Dividend Per Share (pence) | 5.0 | 3.5 | 2.0 |
Consider reading: BT Stock Price Prediction and Dividend Forecast
Risks in the Future for Centrica Stock
Centrica faces a number of risks in the future that could affect its performance and attractiveness as a stock. Some of the key risks are:
- Regulatory and Environmental Pressures: Centrica is subject to stringent regulations and the UK energy price cap, impacting profitability and customer retention. The company also faces challenges in adapting to the net zero emissions target by 2050, requiring significant investments and business model changes.
- Commodity Price Volatility: Earnings are vulnerable to fluctuations in commodity prices, influenced by external factors such as supply-demand dynamics and geopolitical events. While hedging strategies are used, they may not fully mitigate market volatility, as evidenced by a £1.5 billion impairment in 2021 due to declining commodity prices during the pandemic.
- Intense Competition: Centrica competes with larger companies like SSE, National Grid, and ENGIE, which have greater market capitalization and diversified portfolios. This competition threatens Centrica’s market share and profitability.
Key Things to Watch Out for Centrica Stock
Key Considerations for Centrica’s Future
- Strategic Review of Assets: Centrica’s decision regarding its upstream and nuclear assets will be pivotal. This could involve disposals, impairments, or new investments, significantly impacting the company’s asset structure and future strategy.
- Retail and Business Segment Performance: The performance of Centrica’s retail and business segments requires close monitoring, especially considering the challenges posed by the Covid-19 pandemic, energy price cap, customer churn, and operational issues. These factors could significantly influence the company’s market position and profitability.
- Growth Opportunity Execution: The company’s ability to effectively capitalize on growth opportunities in renewable energy, supply security, and customer engagement is crucial. Success in these areas depends on substantial investments, strategic partnerships, and innovative approaches.
- Risk Management: Effective management of various risks, including regulatory and environmental challenges, commodity price volatility, and competition from larger market players, is essential. These risks have the potential to impact Centrica’s earnings, cash flow, and overall reputation in the market.
Investors considering Centrica stock must thoroughly evaluate these aspects, balancing the potential rewards and risks and keeping an eye on the company’s financial health, strategic direction, growth potential, and risk factors.
Final Thoughts Centrica Share Price Forecast 2024, 2025, 2026, 2027, 20230
Centrica presents a nuanced investment landscape, combining elements of opportunity and challenge. Its appeal lies in its low valuation, robust cash flow, and potential for sales and earnings growth, marking it as a potentially attractive investment. However, this is counterbalanced by concerns over limited growth prospects, earnings volatility, and relatively weaker profit margins.
The company’s position in the energy market introduces additional complexities. It must navigate regulatory and environmental constraints, manage the impact of fluctuating commodity prices, and leverage opportunities in renewable energy and customer engagement. These factors, along with the need to ensure the security of supply and flexibility, add layers to the investment decision.
Investors considering Centrica must undertake a thorough analysis. This should encompass the company’s financial health, strategic initiatives, potential for growth, and the spectrum of risks involved. Such a comprehensive evaluation is essential to making an informed investment decision in the context of Centrica’s multifaceted business environment.
FAQs Centrica Share Price Forecast 2024, 2025, 2026, 2027, 20230
What is Centrica Share Price Forecast 2024?
For 2024, the Centrica Share Price Forecast anticipates a range between £1.88 and £2.25, with an average target of £2.06.
What is Centrica Share Price Forecast 2025?
In 2025, the Centrica Share Price is expected to fluctuate between £2.34 and £2.81, averaging around £2.58.
What is Centrica Share Price Forecast 2026?
For the year 2026, the forecast for Centrica’s share price sets its minimum at £2.93, peaks at £3.52, and averages at £3.22.
What is Centrica Share Price Forecast 2030?
In 2030, the forecasted share price for Centrica is estimated to range from a minimum of £7.15 to a maximum of £8.58, with an average price target of £7.87.
