Centrica Earnings: Share Buyback Amount Disappoints Investors; Shares Cheap

We confirm our GBX 180 fair value estimate per share after no-moat Centrica released a drop in its first-half results that was largely expected. The group increased its interim dividend by 13% to GBX 1.5 per share, involving a full-year dividend of GBX 4.5, in line with our estimate. Centrica will proceed to a further GBP 200 million share buyback to be completed by February 2025. We reckon it will be EPS-accretive by 2%. In total, Centrica will have repurchased GBP 1.2 billion since November 2022, leading to a 15% reduction of the number of shares. Still, investors were expecting more than GBP 200 million. Consequently, shares are down by 9% at time of writing. This reaction is excessive and offers an entry point.