Centrica’s share price falls 9%! What the heck’s going on?
Centrica‘s (LSE:CNA) share price has taken a painful dive. At 177.5 per share, the energy giant was last 7% lower on Thursday (19 February), making it the biggest loser across both the FTSE 100 and FTSE 250 indices. It was down 9% at one point.
Investors have had a bit of a shock with their morning coffee, the Footsie firm announcing a full-year profits slump, issuing disappointing forecasts for 2026, and putting the block on further share buybacks.
The question is, are Centrica shares an attractive dip buy to consider?
What’s going on?
In a pretty underwhelming full-year update, Centrica announced a 48% crash in adjusted operating profits for 2025. At £814m, profit dropped as warmer weather meant households consumed less electricity and gas.
Profits at British Gas fell 39% to £163m, even though customer numbers rose 1% to 7.96m.
That wasn’t Centrica’s only problem in what CEO Chris O’Shea described as a “challenging” year. At its Centrica Energy trading arm, adjusted operating profit more than halved to £150m. This was well below the company’s medium-term profit target of £250m-£350m.
The unit was hit by weaker commodity prices and market volatility returning to normal levels. Centrica Energy purchases and then stores gas when prices are favourable, then sells it on when values increase.
Triple trouble
As well as announcing those disappointing profits, Centrica said it’ll make no further share buybacks after the £2bn programme that completed in January.
O’Shea said that the decision “enables us to prioritise investment that creates lasting value for shareholders“. More specifically, the company is investing heavily in assets such as the Sizewell C nuclear plant and the Grain LNG terminal it purchased in August.
To cap things off, Centrica said it expects adjusted earnings of just £250m in 2026 from its trading business (which includes Centrica Energy). This reflects ongoing market weakness and high net interest costs.
In better news, net cash fractionally beat forecasts at £1.5bn, though this was still down 48% year on year. Centrica also raised the full-year dividend to 5.5p in 2025, up 22%.
Is Centrica a Buy?
Today’s price plunge means Centrica’s price-to-earnings (P/E) ratio for 2026 is 13.5 times. That’s below the 10-year average of 15-16. But is that low enough to encourage me to buy its shares?
Massive investment in areas like nuclear and renewables provides the business with enormous growth opportunities looking ahead. The problem is the cost is also huge — total capital expenditure more than doubled last year, to £1.2bn — and will remain elevated for the next few years at least, hitting earnings.
The consequences on Centrica’s share price and dividends could therefore be significant, and particularly if market conditions are tough. The FTSE 100 company might be worth a look from dip buyers. But I won’t be buying it for my portfolio.
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Royston Wild 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.
