Earnings Per Share (CenterPoint Energy)
Basic earnings per common share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Participating securities are excluded from weighted average number of common shares outstanding in the computation of basic earnings per common share. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding, including all potentially dilutive common shares, if the effect of such common shares is dilutive.
Diluted earnings per common share reflects the dilutive effect of potential common shares from share-based awards. The dilutive effect of restricted stock is computed using the if-converted method, which assumes conversion of the restricted stock at the beginning of the period. The dilutive effect of restricted stock is computed using the treasury stock method, as applicable, which includes the incremental shares that would be hypothetically vested in excess of the number of shares assumed to be hypothetically repurchased with the assumed proceeds.
Until settlement of the equity forwards executed in April 2025 and May 2025 as further described in Note 11, dilutive earnings per common share reflects the dilutive impact of potential issuances of shares of Common Stock associated with the outstanding equity forwards. The dilutive effect of equity forwards is determined under the treasury stock method. Share dilution occurs when the average market price of Common Stock is higher than the forward sales price at the end of the reporting period.
Diluted earnings per common share will also reflect the dilutive effect of potential conversions of our convertible notes into shares of Common Stock. Convertible debt in which the principal amount must be settled in cash is excluded from the calculation of diluted earnings per common share. There would be no interest expense adjustment to the numerator for the cash-settled portion of the convertible notes because that portion will always be settled in cash. The conversion spread value in shares will be included in diluted earnings per common share using the if-converted method if the average market price of Common Stock is higher than the conversion price. The denominator of diluted earnings per common share is determined by dividing the conversion spread value of the share-settled portion of the convertible notes as of the reporting date by the average share price over the reporting period. For further details on the convertible notes, see Note 12.
The following table reconciles numerators and denominators of CenterPoint Energy’s basic and diluted earnings per common share for the periods presented:
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2025 | | 2024 | | 2023 |
| | (in millions, except per share and share amounts) |
| Numerator: | | | | | |
| Net income | $ | 1,052 | | | $ | 1,019 | | | $ | 917 | |
Less: Preferred stock dividend requirement | — | | | — | | | 50 |
Income available to common shareholders - basic and diluted | $ | 1,052 | | | $ | 1,019 | | | $ | 867 | |
| | | | | |
| Denominator: | | | | | |
| Weighted average common shares outstanding - basic | 652,671,000 | | | 643,163,000 | | | 630,947,000 | |
Plus: | | | | | |
| Restricted stock | 1,938,000 | | | 974,000 | | | 2,232,000 | |
Equity forwards | 1,000,000 | | | — | | | — | |
Convertible notes (1) | 41,000 | | | — | | | — | |
| Weighted average common shares outstanding - diluted | 655,650,000 | | | 644,137,000 | | | 633,179,000 | |
| | | | | |
| Earnings per Common Share: | | | | | |
| Basic | $ | 1.61 | | | $ | 1.58 | | | $ | 1.37 | |
| Diluted | $ | 1.60 | | | $ | 1.58 | | | $ | 1.37 | |
(1) Related to the 2026 Convertible Notes.
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.