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Entergy (ETR) to Post Q2 Earnings: Is a Beat in the Cards?

Zacks Equity Research

Entergy Corporation ETR is set to release second-quarter 2019 results on Jul 31, before the opening bell.
 
In the last reported quarter, the company reported a negative earnings surprise of 12.77%. However, Entergy surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average positive surprise being 21.88%.
 
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 second 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 +1.40%. 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 price-eps-surprise | Entergy Corporation Quote

Factors at Play

During most of the second quarter of 2019, Entergy’s service territories witnessed above-average temperatures, highlighted by significantly warm and wet weather conditions. This will result in increased electricity demand, which may have driven the company’s revenues in the second quarter.

In line with this, the Zacks Consensus Estimate of $2.98 billion for the company’s second-quarter revenues indicates 11.7% growth from the year-ago quarter’s reported figure.

However, Entergy expects to incur high non-fuel Operations and Management (O&M) expenses in the second quarter due to operations at the Palisades plant. Such rising costs are expected to get reflected in its bottom line in the to-be-reported quarter.

The company has been experiencing higher interest expenses for the last few quarters. We expect similar trends to continue in the second quarter and hurt the company’s bottom-line performance.
 
Considering this, the Zacks Consensus Estimate for Entergy’s second-quarter earnings of $1.38 per share calls for a decline of 22.9% from the figure reported in the year-ago quarter.

Other Stocks to Consider

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

The Southern Company SO has an Earnings ESP of +0.46% and a Zacks Rank #3. The company is expected to release second-quarter results on Jul 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

Black Hills Corporation BKH is scheduled to release second-quarter results on Aug 5. It has an Earnings ESP of +0.75% and a Zacks Rank of 3.

A Recent Utility Release

Edison International EIX reported second-quarter 2019 adjusted earnings of $1.58 per share, which surpassed the Zacks Consensus Estimate of $1.15 by 37.4%.

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Edison International (EIX) : Free Stock Analysis Report
 
Entergy Corporation (ETR) : Free Stock Analysis Report
 
Southern Company (The) (SO) : Free Stock Analysis Report
 
Black Hills Corporation (BKH) : Free Stock Analysis Report
 
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