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Why Is Entergy (ETR) Down 2% Since Last Earnings Report?

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A month has gone by since the last earnings report for Entergy (ETR). Shares have lost about 2% in that time frame, outperforming the S&P 500.

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

Entergy Q1 Earnings Miss Estimates, Revenues Rise Y/Y

Entergy Corporation reported first-quarter 2022 adjusted earnings of $1.32 per share, which missed the Zacks Consensus Estimate of $1.38 by 4.3%. The reported figure also declined 10.2% from $1.47 per share in the year-ago quarter.

Entergy reported GAAP earnings of $1.36 per share compared with $1.66 a year ago.

Total Revenues

Entergy’s first-quarter revenues of $2.88 billion exceeded the Zacks Consensus Estimate of $2.75 billion by 4.8%. Further, revenues increased 1.2% from $2.84 billion in the year-ago quarter due to higher Electric and Natural gas revenues.

Segment Results

Utility: The segment’s quarterly earnings came in at $1.67 per share compared with $1.77 in the prior-year quarter.

Parent & Other: The segment incurred a loss of 35 cents per share compared with a loss of 30 cents in the prior-year quarter.

Highlights of the Release

Operating expenses in the fourth quarter were $2.31 billion, down 1.1% from $2.34 billion in the year-ago quarter.

Operating income during the quarter totaled $566.1 million, up 11.4% from $508 million in the year-ago quarter.

Interest expenses were $227.6 million, up 10.6% from $205.9 million in the year-ago quarter.

As of Mar 31, 2022, total retail customers served by the company increased 0.9% to 2.98 million.

Financial Highlights

As of Mar 31, 2022, Entergy had cash and cash equivalents of $701.6 million compared with $442.6 million as of Dec 31, 2021.

Long-term debt was $26.18 billion as of Mar 31, 2022 compared with $24.84 billion as of Dec 31, 2021.

During the first quarter of 2022, the company generated cash from operating activities of $538 million against cash outflow from operating activities of $49.6 million in the first quarter of 2021.

Guidance for 2022

For 2022, Entergy still expects to generate adjusted earnings in the range of $6.15-$6.45. The Zacks Consensus Estimate for the company’s earnings is currently pegged at $6.34 per share, which is higher than $6.30, the midpoint of the guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Entergy has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward 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.

Performance of an Industry Player

Entergy belongs to the Zacks Utility - Electric Power industry. Another stock from the same industry, Avangrid (AGR), has gained 5.7% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Avangrid reported revenues of $2.13 billion in the last reported quarter, representing a year-over-year change of +8.5%. EPS of $1.16 for the same period compares with $1.14 a year ago.

Avangrid is expected to post earnings of $0.34 per share for the current quarter, representing a year-over-year change of -2.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Avangrid. Also, the stock has a VGM Score of C.


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