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Entergy (ETR) Up 4.1% Since Last Earnings Report: Can It Continue?

Zacks Equity Research
Forum Energy (FET) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

It has been about a month since the last earnings report for Entergy (ETR). Shares have added about 4.1% in that time frame, outperforming the S&P 500.

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

Entergy Corp Q4 Earnings Beat, Revenues Decline Y/Y

Entergy Corporation reported fourth-quarter 2018 adjusted earnings of 60 cents per share, which surpassed the Zacks Consensus Estimate of 48 cents by 25%. However, the reported figure decreased 21.1% from 76 cents registered in the year-ago quarter.

Excluding the effects of special items, the company incurred GAAP loss of 36 cents per share compared with a loss of $2.26 per share a year ago.

For 2018, the company reported adjusted earnings of $7.31 per share, which outpaced the Zacks Consensus Estimate of $7.15 by 2.2%. The bottom line also increased 1.5% from $7.20 in the prior year.

Total Revenues

In the quarter under review, total revenues came in at $2,512.5 million, which exceeded the Zacks Consensus Estimate of $1,961 million by 28.1%. However, the top line fell 4.2% from the year-ago quarter’s $2,623.8 million.

For 2018, the company’s total revenues amounted to $11.01 billion, which surpassed the Zacks Consensus Estimate of $10.74 billion by 2.4%.

However, the reported figure slipped 0.6% from the year-ago quarter’s $11.07 billion.

Segment Results

Utility: The segment’s quarterly adjusted earnings came in at $1.91 per share compared with 74 cents in the prior-year quarter.

Parent & Other: The segment incurred adjusted loss of 44 cents per share compared with a loss of 33 cents in the prior-year quarter.

Entergy Wholesale Commodities (EWC): The segment incurred adjusted loss of 87 cents per share against earnings of 35 cents registered in the year-ago quarter.

Highlights of the Release

Operating expenses in the quarter summed $2.74 billion, up 14.9% from $2.39 billion in the year-ago quarter.

Interest expenses were $197.8 million, up 7.3% from $184.4 million in the year-ago quarter.

In the reported quarter, total retail customers served by the company increased 0.6% to nearly 2.9 million.

Financial Highlights

As of Dec 31, 2018, the company had cash and cash equivalents of $481million compared with $781 million as of Dec 31, 2017.

At the end of 2018, the company generated cash from operating activities of $2.39 billion, down from $2.62 billion in the prior year.

Guidance

For 2019, Entergy expects its operational earnings to remain in the band of $5.10-$5.50 per share. The Zacks Consensus Estimate for the company’s earnings is currently pegged at $5.35, higher than the midpoint of the company’s guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted -25% due to these changes.

VGM Scores

At this time, Entergy has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Entergy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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