Baron Financials ETF on Centuri
Thesis
Baird initiated Centuri because it believes the market is underestimating the company's growth potential. A record backlog points to earnings growth above current market expectations, while the recent spin-off from Southwest Gas has left the company relatively underfollowed and misunderstood. Management is also taking steps to improve business quality, including equipment sale-leasebacks that Baird expects to enhance returns, free cash flow, and capital efficiency.
“we believe the market is underestimating the company's growth potential, as its record backlog points to earnings growth well above current expectations”