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Is Entergy Corporation (ETR) Poised to Beat on Q1 Earnings?

Zacks Equity Research

Entergy Corporation ETR is set to release first-quarter 2019 results on May 1, before the opening bell.


In the last reported quarter, the company delivered a positive earnings surprise of 25%. Moreover, Entergy surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 22.21%.


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


Why a Likely Positive Surprise?


Our proven model shows that Entergy is likely to beat earnings estimates in the first quarter. Notably, 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.


Earnings ESP: Entergy has an Earnings ESP of +3.99%. You can uncover the best stocks to buy or sell before they’re reported  with our Earnings ESP Filter.


Zacks Rank: The company carries a Zacks Rank #2, which along with a positive Earnings ESP increases the possibility of an earnings beat.


Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) 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

Factors at Play


The company’s service territories witnessed below-normal temperatures during most of the first quarter of 2019. A total of  470 storm reports were recorded across Texas, Oklahoma, Arkansas, Louisiana and Mississippi during the entire first quarter. This may have caused electric outages, thereby leading to a disruption in smooth supply of power. Therefore, such  weather conditions may have negatively impacted Entergy's revenues in the to-be-reported quarter.


In line with this, the Zacks Consensus Estimate of $2.67 billion for the company’s first-quarter sales suggests a decline  of 1.91% from the year-ago quarter’s reported figure.


Lately, Entergy has been witnessing low returns on decommissioning trust investments and reduced net revenues from low  nuclear volumes. Moreover, the company expects to incur high non-fuel Operations and Management (O&M) expenses in the near  term, if operations continue at the Palisades plant till 2022. Such rising costs are expected to get reflected on the  company’s bottom line in the to-be-reported quarter. 


Considering this, the Zacks Consensus Estimate for Entergy’s first-quarter earnings of 95 cents calls for a decline of 18.1% from the figure reported in the year-ago quarter.


Other Stocks to Consider


Here are a few players from the Utilities sector that have the right combination of elements to post an earnings beat this  quarter.


Pinnacle West Capital Corp. PNW has an Earnings ESP of +1.41% and a Zacks Rank #2. The company is scheduled to report first-quarter results on May 1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Consolidated Edison Inc. ED has an Earnings ESP of +0.07% and a Zacks Rank #3. The company is scheduled to report first-quarter results on May 2.


A Recent Utility Sector Release


American Electric Power Co., Inc. AEP reported first-quarter 2019 adjusted earnings per share (EPS) of $1.19, surpassing the Zacks Consensus Estimate of $1.10 by 8.2%.


Zacks' Top 10 Stocks for 2019


In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year? 


Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.


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