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Reasons to Bet on Entergy (ETR) Stock for Your Portfolio

Zacks Equity Research

Entergy Corporation ETR is well positioned with stable liquidity, backed by a strong cash generation capacity, which enables it to invest in its business. This Zacks Rank #2 (Buy) utility remains a promising bet, given its focus on disciplined capital allocation to growth projects, pollution control measures and cost-containment efforts.

Encouraging Growth Projections & Positive Surprise History: The Zacks Consensus Estimate for 2020 earnings per share is pegged at $5.57 on $11.7 billion revenues. While the top line implies a 1.19% increase year over year, the bottom line suggests a 5.04% improvement from the year-ago figure.

Entergy has an expected long-term earnings (three to five years) per share growth rate of 7%.

Entergy’s trailing four-quarter positive earnings surprise is 4.79% on average.

Impressive Price Performance: Shares of Entergy have surged 46.4% in the past 12 months, outperforming the industry’s growth of 23.3%.

 

Consistent Dividend Payouts: In addition to utilizing funds for growth projects, Entergy continues to be committed towards maximizing shareholder value through regular payout of dividends. During third-quarter 2019, the company paid out common stock dividend of 93 cents per share, amounting to $180.9 million compared with $161 million in the prior-year quarter. Entergy intends to raise its dividend at a steady pace, in sync with its investment strategy.

The current dividend yield of the company is 2.95%, outperforming the industry average of 2.81%, along with an annual dividend of $3.72 per share.

Key Drivers in Place

The company plans to invest $11.87 billion during the 2019–2021-time frame, including $4.52 billion in generation, $3.46 billion in distribution and $2.48 billion in transmission. It expects grid upgrades, asset replacement, and industrial load growth to drive earnings.

Entergy is making a steady progress in adding renewable generation to its portfolio. It currently boasts approximately 1,000 megawatts of renewable in various stages of development. These renewable projects are expected to strengthen the company’s position in the booming renewable energy market.

Other Stocks to Consider

Other top-ranked stocks in the utility sector include Edison International EIX, NorthWestern Corporation NWE and Atmos Energy Corporation ATO, all holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edison International, NorthWestern Corporation, and Atmos Energy delivered a respective four-quarter average positive earnings surprise of 0.09%, 10.49% and 3.18% respectively.

Long-term earnings per share growth for Edison International, NorthWestern Corporation and Atmos Energy is projected at 5.32%, 3.53% and 7.15% each.

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NorthWestern Corporation (NWE) : Free Stock Analysis Report
 
Entergy Corporation (ETR) : Free Stock Analysis Report
 
Edison International (EIX) : Free Stock Analysis Report
 
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
 
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