Centrica PLC Facing Ofgen Probe Into Profits

Centrica PLC (LON: CNA) sees shares fall as competition within energy sector scrutinised.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

gasringThe shares of Centrica (LSE: CNA) (NASDAQOTH: CPYYY.US) fell 3% to 305p during late trading this morning after a warning that the energy sector might need to be broken up. Ed Davey, the energy secretary, has called for the regulator to investigate the profits made by the biggest energy companies, and make sure customers are getting a fair deal.

The cabinet minister’s comments wiped £600 million off the British Gas owner’s value — and it isn’t the first time a politician’s comments have damaged Centrica’s share price. Since the end of September, when Ed Miliband stated that he would freeze energy prices if Labour take power in 2015, the stock has dropped 16%.

Mr Davey singled out British Gas in particular with his comments, noting that it has the largest share of the gas market, and that over the last three years it has charged among the highest prices. The regulator, Ofgen, said that it was looking into competition issues and that it wouldn’t reveal more than that until its findings are published in March.

Before today, analysts were expecting Centrica’s annual results to show earnings of 28p per share, and a dividend equivalent to 17p per share.

Following this morning’s price movement the shares may therefore trade on a P/E of 11 and offer a potential income of around 5.5%.

The decision to ‘buy’ — based on those ratings, today’s results and the wider prospects for the energy sector — is, of course, entirely your decision.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Mark does not own shares in any company mentioned.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »