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Tuesday, March 21, 2017

Entergy (ETR) Up 3% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Entergy Corporation ETR. Shares have added about 3% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Entergy Beats on Q4 Earnings, Provides 2017 Guidance

Entergy Corporation reported fourth-quarter 2016 operational earnings of $0.31 per share, beating the Zacks Consensus Estimate of 11 cents by 181.8%. The reported number, however, declined 80.4% from $1.58 reported a year ago.

On a GAAP basis, Entergy reported fourth-quarter 2016 loss of $9.88 per share, while in the year-ago period it had incurred an earnings of $0.56.

For 2016, the company reported adjusted EPS of $7.11, beating the Zacks Consensus Estimate of $6.83 by 4.1%. Year over year, this figure improved 18.5% from $6.00 in 2015.

Total Revenue

In the quarter under review, Entergy reported total revenue of $2,648.5 million, missing the Zacks Consensus Estimate of $2,937 by 9.8%. Nevertheless, revenues were up 5.6% from the year-ago tally of $2,508.5 million.

For 2016, the company generated total revenue of $10.85 billion, which missed the Zacks Consensus Estimate of $11.61 billion by 7%. The revenue figure also declined 5.7% from $11.51 billion in 2015.

Segment Results

Utility, Parent & Other: The segment’s quarterly earnings were 27 cents per share compared to a loss of 12 cents in the prior-year quarter.

Entergy Wholesale Commodities (EWC): The segment reported operating loss of 4 cents per share for the fourth quarter, compared with 16 cents earned in the year-ago quarter.

Financial Highlights

As of Dec 31, 2016, the company had cash and cash equivalents of $1,187.8 million compared with $1,351.0 million as of Dec 31, 2015.

Total debt as of Dec 31, 2016 was $14.5 billion compared with $13.1 billion as of Dec 31, 2015.

For fourth-quarter 2016, cash from operating activities was $746.3 million, down from $941.5 million in the prior-year quarter.

Guidance

For 2017, Entergy expects operational earnings per share in the band of $4.75−$5.35.

The Utility, Parent & Other’s adjusted earnings are expected in the range of $4.25 to $4.55 per share.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

Entergy Corporation Price and Consensus

 

Entergy Corporation Price and Consensus | Entergy Corporation Quote

VGM Scores

At this time, Entergy's stock has a subpar Growth Score of 'D', however its Momentum is doing a bit better with a 'C'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is more suitable for value investors than momentum investors based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift.  Notably, the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.


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Zacks Investment Research

March 21, 2017 at 04:52PM

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from Zacks Equity Research

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