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Entergy (ETR) to Report Q1 Earnings: Will it Beat Again?

Zacks Equity Research

Entergy Corporation ETR will release first-quarter 2017 financial numbers before the opening bell on Apr 26. The company reported a positive earnings surprise of 181.82% in the last reported quarter. 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 this season because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates, and Entergy has the right mix.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate is +1.89%. This is because the Most Accurate estimate stands at $1.08, while the Zacks Consensus Estimate is pegged slightly lower at $1.06. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Entergy’s Zacks Rank #3, when combined with a positive ESP, makes us reasonably confident of an earnings beat this quarter.

Note that we caution against stocks with Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision.

Entergy Corporation Price and EPS Surprise

 

Entergy Corporation Price and EPS Surprise | Entergy Corporation Quote

Factors at Play

During the fourth-quarter earnings call, Entergy said that it expects continued growth in industrial sales in 2017 driven by new and expansion projects. As a result, it is expected that industrial sales will witness growth in the first quarter as well.

Again, the company's service territories witnessed above-average temperatures during the first quarter. This should in fact lead to increased electric sales in these regions, which in turn, is expected to boost the top line.

Nevertheless, Entergy said that in the first half of this year sales to existing petroleum refiners are projected to fall year over year due to anticipated customer outages. We believe, this will impact the company’s first quarter negatively.

For the first quarter, the Zacks Consensus Estimate for earnings reflects a decline of 21.2%, on revenues of $2.57 billion, implying a 1.7% year-over-year decline.

Other Stocks to Consider

Here are a few other operators in the electric utility space worth considering, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

NiSource, Inc. NI will report first-quarter results on May 3. The company has an Earnings ESP of +3.08% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pattern Energy Group, Inc. PEGI has an Earnings ESP of +300% and a Zacks Rank #3. The company is expected to report first-quarter results on May 8.

Pinnacle West Capital Corporation PNW has an Earnings ESP of +7.14% and a Zacks Rank #3. The company is slated to release first-quarter results on May 2.

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