Is the Centrica share price now a bargain?

first_img Enter Your Email Address Image source: Getty Images. Karl Loomes | Monday, 17th February, 2020 | More on: CNA “This Stock Could Be Like Buying Amazon in 1997” Last week Centrica (LSE: CNA), owner of British Gas, posted a massive £1.1bn loss for the year. Subsequently, its share price dropped about 17%, leaving it down about 50% compared to the same time last year.This kind of low price makes me wonder if the company is truly worth this little, or if some bad headline numbers have simply seen the stock oversold. As always, the devil is in the detail.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Government influenceCentrica said (though it was far from the main cause of its woes) that its numbers were “heavily impacted” by a cap on energy prices introduced by the government last year that affected about 11 million homes. For me, this was a red flag.I have long had an aversion to investing in firms that see too much government interference. Please note here, I don’t mean fair government regulation, I mean industries and firms where politicians attempt to curry favour with voters by interfering with a market or firm for non-financial reasons. In my experience, politics and finance just don’t mix.What makes good politics doesn’t necessarily make for good economic policy, and nor does good economic or business policy make for good political capital. From the point of view of an investor who simply wants to see good returns on their money, these sectors are simply best avoided.The impact of a government cap (a political rather than economic move) on prices is the exact kind of influence that would make me avoid a stock forever.Low prices and nuclear problemsMoving away from these political concerns however, much of Centrica’s loss came down to lower commodity prices (from which almost all energy firms are suffering), as well as a number of one-off charges. Most notable of these was a £476m write-down in the value of its oil and gas production assets and a £372m impairment of its 20% stake in the UK’s eight operational nuclear power stations.Last year saw outages at two of these nuclear stations hitting the UK and spooking investors, as well as the general public, about the health and robustness of our electricity supply.This month’s numbers come as an additional hit for Centrica as its turnaround had seemed to be making some headway – its share price generally recovering a little ground since about October. This latest news has come close to wiping out those gains.Centrica is attempting to sell a number of its assets and said last week that it still intends to sell its 69% stake in Spirit Energy this year. The company did say however, that its efforts to sell its 20% nuclear stake couldn’t be guaranteed to succeed in 2020 due to complications coming from its French partner EDF, which is also trying to sell down part of its holding.Personally, write-downs rarely worry me, as by their nature they are usually one-off. Likewise, some of Centrica’s problems with commodity prices and sale complications are not necessarily a major concern for a long-term investor.However, the relatively large number of these problems, combined with the political nature of its industry, makes the uncertainty around Centrica too much for me to ignore. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Karl has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!center_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Simply click below to discover how you can take advantage of this. Is the Centrica share price now a bargain? Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. See all posts by Karl Loomes Our 6 ‘Best Buys Now’ Shareslast_img read more