Centrica Earnings: In Line With Expectations, Share Buyback Pause Disappoints

Why It Matters

The earnings drop and halted buybacks highlight limited near‑term upside, while trading headwinds pressure profitability and valuation.

Key Takeaways

• EPS fell 41% to GBX11, meeting consensus
• £2bn share buyback completed, now paused
• 2026 guidance weak due to trading headwinds
• EBITDA 2028 outlook raised to £1.7bn
• Dividend increased 22% to GBX5.5 per share

Pulse Analysis

Centrica’s latest earnings underscore the volatility facing UK utilities as energy markets recalibrate after years of high commodity prices. The 41% EPS decline reflects not only lower margins in gas and power trading but also the impact of substantial capital outlays, including the £2 billion share‑buyback that has now been suspended. Investors are weighing the short‑term earnings pain against the company’s strategic shift toward longer‑term assets such as Grain LNG and the life‑extension of nuclear projects, which aim to diversify revenue streams beyond volatile trading.

The firm’s decision to raise its 2028 EBITDA guidance to £1.7 billion signals confidence that the new asset mix will offset the recent disposals of gas‑production holdings. However, the trading division’s compressed spreads and reduced activity are expected to linger into 2026, keeping EBITDA below normalized levels. This dynamic creates a nuanced outlook: while the investment pipeline promises future growth, the immediate earnings trajectory remains constrained, prompting analysts to maintain a cautious stance on valuation.

From an investor perspective, Centrica’s fair‑value estimate of GBX 200 and its three‑star Morningstar rating suggest limited margin of safety. The 22% dividend increase to GBX 5.5 per share offers a modest yield boost, yet the net cash position fell to £1.5 billion as cash‑flow was outpaced by buybacks and capital projects. Market participants will monitor how the paused buyback program and upcoming 2030 EBITDA target of £2 billion influence share performance, especially as the broader energy sector grapples with regulatory pressures and the transition to greener generation sources.

Centrica Earnings: In Line With Expectations, Share Buyback Pause Disappoints

Tancrede Fulop, CFA · 19 Feb 2026

Key Morningstar Metrics for Centrica

• Fair Value Estimate: GBX 200

• Morningstar Rating: ★★★

• Morningstar Economic Moat Rating: None

• Morningstar Uncertainty Rating: Medium

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What We Thought of Centrica’s Earnings

Centrica (CNA) 2025 EPS tumbled by 41 % to GBX 11, in line with FactSet consensus. After completing £2 billion of share buybacks, Centrica will pause the program. This, combined with the soft guidance for 2026 because of the trading business, sent shares 5 % lower at the time of writing (Feb 19).

Why it matters: Centrica bought back 25 % of its shares at an average price of GBX 136, creating material value. It vindicates its pause by seeing better opportunities in investments. We concur given that shares look almost fully valued and reduced headroom after the step‑up in investments in 2025.

• Most businesses posted a material profitability fall in 2025. Gas and power trading performed poorly because of compressed seasonal spreads and reduced activity because of risk management. Those headwinds will persist in 2026, so the business’ EBITDA will be short of its normalized profitability.

• The group upped its 2028 EBITDA outlook by £100 million to £1.7 billion, in line with our estimate. The Grain LNG investment and nuclear plants’ life extensions will more than offset the recent gas‑production asset disposals.

The bottom line: We confirm our GBX 200 fair‑value estimate and no‑moat rating for Centrica. Shares are in 3‑star territory, meaning there is not enough margin of safety to buy them.

• As expected, Centrica will pay a GBX 5.5 dividend on 2025 earnings, 22 % above 2024 and implying a 50 % payout.

Long view: Centrica set its 2030 EBITDA guidance at £2 billion, in line with the run‑rate implied by our £1.74 billion estimate in 2029.

Key stats: Net cash position was £1.5 billion at end‑2025, £1.4 billion lower than at end‑2024 as operating cash flow was largely exceeded by £0.8 billion of buybacks and investments, including Sizewell C and Grain LNG.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. See Morningstar’s editorial policies.