The share price of Entergy Corp. (ETR) reached a 52-week high of $73.27 during intraday trading on Apr 16, 2014, finally closing at $72.01. With a market cap of roughly $12.9 billion, Entergy shares have increased 18.0% so far this year. The average volume traded over the last three months is around 1.7 million.
This multi-state utility company recently provided a robust outlook for the first quarter 2014 as well as boosted its 2014 earnings guidance. The optimistic forecast is the result of higher wholesale electricity prices owing to cold winter weather and limitations of pipeline infrastructure in the Northeast U.S.
Entergy now expects first quarter operational earnings to be about $2.28 per share, significantly higher than the year-ago profit of 94 cents per share. On an as-reported basis, Entergy expects earnings of $2.23 per share for the first quarter. For 2014, the company raised its bottom line outlook to $5.55–$6.75 from its previous expectation of $4.60–$5.40.
The company, which is slated to report its first quarter earnings on Apr 24, is anticipating superior results in both its divisions – Entergy Wholesale Commodities and Utility. However, Entergy’s fourth quarter 2013 earnings had dropped approximately 42% year over year on higher total operating expenses as well as an increase in shares outstanding.
Given its geographically-diversified mix of regulated and merchant operations, the company is insulated from regulatory bottlenecks and power-price volatility in any particular region.
Again, Entergy’s plans to realign its operations to optimize resource-utilization will help the company to meet its goal of annual compound earnings growth of 6% in the next five years while boosting margins.
The company is currently trading at a forward price-to-earnings (P/E) ratio of 13.4x, which is lower than the peer average of 15.4x. Its return on equity is 10.4%, higher than the peer average of 9.2%.
Entergy currently has a Zacks Rank #2 (Buy). Some better-ranked stocks in the same industry include Public Service Enterprise Group Inc. (PEG), NRG Energy, Inc. (NRG) and NRG Yield, Inc. (NYLD). All these stocks sport a Zacks Rank #1 (Strong Buy).