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What Awaits Entergy Corporation (ETR) in Q4 Earnings?

Zacks Equity Research

Entergy Corporation ETR is set to report fourth-quarter and full-year 2018 results on Feb 20, before the market opens.

In the last reported quarter, the company witnessed a positive earnings surprise of 33.22%. The bottom line outpaced the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 36.20%.

Let’s see how things are shaping up prior to this announcement.

Factors Under Consideration

The company's service territories witnessed below normal temperatures, during most of the fourth quarter. However, a total of 231 storm reports were recorded across Texas, Oklahoma, Arkansas, Louisiana and Mississippi in October 2018, while in November a total of 151 storm reports across Texas, Oklahoma, Arkansas, Louisiana, Mississippi and Tennessee were recorded. This may have caused a few outages, and thereby disrupted smooth supply of power. Therefore, temperature is likely to hurt Entergy's revenues in the to-be-reported quarter.

In line with this, the Zacks Consensus Estimate for Entergy’s fourth-quarter sales pegged at $1.96 billion reflects a year-over-year decline of 25.3%.

Entergy has been lately experiencing higher non-fuel Operations and Management (O&M) expenses, owing to increasing nuclear expenses, including nuclear payroll. The company expects to incur similar increasing nuclear expenses in the near term, if operations continue at the Palisades plant till 2022. Such rising costs are expected to weigh heavily on the company’s results in the to-be-reported quarter.

In line with this, the Zacks Consensus Estimate for Entergy’s fourth-quarter earnings pegged at 48 cents reflects an annual decline of 36.8%.

What the Zacks Model Unveils

Our proven model does not conclusively show that Entergy is likely to beat estimates in the fourth quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen, and here the case is not that.

Earnings ESP: Entergy has an Earnings ESP of -7.29%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Entergy currently has a Zacks Rank #3.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Entergy Corporation Price and EPS Surprise

Entergy Corporation Price and EPS Surprise | Entergy Corporation Quote

Utility Stocks With Favorable Combination

The Southern Company SO is expected to release fourth-quarter results on Feb 20. It has an Earnings ESP of +22.29% and a Zacks Rank #2.

Pinnacle West Capital Corporation PNW is expected to release fourth-quarter results on Feb 22. It has an Earnings ESP of +4.17% and a Zacks Rank #2.

Alliant Energy Corporation LNT is expected to release fourth-quarter results on Feb 21. It has an Earnings ESP of +1.41% and a Zacks Rank #2.

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