Entergy (ETR) Up 3.5% Since Earnings Report: Can It Continue?

It has been more than a month since the last earnings report for Entergy Corporation ETR. Shares have added about 3.5% in that time frame, outperforming the market.

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

Entergy Beats Q2 Earnings Estimates, Lifts '17 View

Entergy reported second-quarter 2017 operational earnings of $3.11 per share, beating the Zacks Consensus Estimate of $1.20 by 159.2%. However, the reported number was in line with the year-ago figure.

On a GAAP basis, Entergy posted earnings of $2.27 per share compared with $3.16 a year ago. The difference between GAAP and operating earnings in the reported quarter was due to effects of special items of 84 cents.

Total Revenue

In the quarter under review, the company reported total revenue of $2,618.6 million, beating the Zacks Consensus Estimate of $2,444 by 7.1%. It was also up 6.3% from the year-ago figure of $2,462.6 million.

Segment Results

Utility, Parent & Other: The segment’s quarterly earnings were $1.03 per share compared with $1.77 in the prior-year quarter.

Entergy Wholesale Commodities (EWC): The segment reported operating earnings of $2.08 per share compared with $1.34 in the year-ago quarter.

Highlights of the Release

Operating expenses in the quarter were $2.48 billion, up 22.5% from $2.02 billion spent in the year-ago quarter. The year-over-year increase was primarily owing to higher fuel, fuel related expenses, and gas purchased for resale, purchased power, and other operation and maintenance expenses, asset write-offs, impairments and related charges.

Interest expenses were $173.4 million, down 2.4% from the year-ago quarter.

In the reported quarter, total retail customers served by the company increased 0.8% to nearly 2.9 million.

Financial Highlights

As of Jun 30, the company had cash and cash equivalents of $934.5 million compared with $1,187.8 million as of Dec 31, 2016.

Total debt, as of Jun 30, was $14.3 billion compared with $14.5 billion as of Dec 31, 2016.

For second-quarter 2017, cash from operating activities was $290.3 million, down from $719.3 million in the prior-year quarter.

Guidance

For 2017, Entergy raised its operational earnings guidance per share in the band of $6.80-$7.40 compared with prior guidance of $4.75-$5.35.

The Utility, Parent & Other’s adjusted earnings are still expected in the range of $4.25-$4.55 per share.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last month as none of them issued any earnings estimate revisions.

Entergy Corporation Price and Consensus

 

Entergy Corporation Price and Consensus | Entergy Corporation Quote

VGM Scores

At this time, Entergy's stock has a poor Growth Score of F, however its Momentum is doing a lot better with a B. Charting a somewhat similar path, 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.

Our style scores indicate that the stock is suitable for momentum and value investors.

Outlook

The stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.

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