Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Entergy Corp. (ETR - Analyst Report) has provided a preliminary earnings update for the third quarter of 2013. The company expects operational earnings of $2.40 per share, up 23% year over year. The figure is also above the current Zacks Consensus Estimate by 20.6%.

The significant increase is expected on the heels of higher net revenue and a lower effective income tax rate, partially offset by higher non-fuel operation and maintenance and depreciation expenses.

In stark contrast to this favorable guidance, in July this year, the company reported second quarter operational earnings of $1.01 per share that came a penny below the Zacks Consensus Estimate and 52.1% short of the year-ago profit of $2.11 per share. The downside mainly reflected higher income tax expenses at the Utility and Parent & Other segments.

The company also indicated that earnings from Entergy Wholesale Commodities declined sequentially due to lower net revenue and higher decommissioning expense, partially offset by lower income taxes.

The company reaffirmed its guidance for 2013 in the range of $4.60 to $5.40.

On a reported basis, the company expects third quarter earnings of $1.33, down 31.8% year over year. This includes impairment charges related to the closing and decommissioning of the Vermont Yankee Nuclear Power Station, expenses associated with the implementation of the human capital management (“HCM”) strategic imperative and expenses associated with the proposed spin-off and merger of Entergy's electric transmission business with ITC Holdings Corp. (ITC - Snapshot Report).

During the third quarter, the company announced its intention to shut down the Vermont Yankee nuclear power plant in the fourth quarter of 2013. The crucial decision came in the wake of a shale gas induced supply glut that has lowered wholesale energy prices, high costs for running the plant relative to its size, and wholesale market design flaws that led to artificially low energy and capacity prices in the region.

In the third quarter of 2013, the company had expected an after-tax impairment charge of approximately $181 million. Going forward, it expects to incur charges in the range of $55 million to $60 million related to future severance and employee retention costs through the end of 2014.

The company is also progressing well on its HCM initiative. This has resulted in a new internal organization structure that has led to the elimination of 800 employees. The company expects one-time costs associated with this phase of HCM in the range of $145 million to $185 million. It expects the majority of these expenses to be incurred by the end of 2013. However, going forward, it expects total savings from HCM in the range of $200.0 million to $250.0 million by 2016 due to workforce reduction, lower compensation and benefits, and lower contractor fees.

The company is expected to release its third quarter results on Oct 29, 2013. The Zacks Consensus Estimate for the third quarter and full year 2013 are currently at $1.99 per share and $4.96 per share, respectively.

Entergy is well positioned due to its geographically-diverse mix of regulated and merchant operations. The initiatives taken by the company will help in achieving its growth objectives. The company presently has a short-term Zacks Rank #2 (Buy). Other stocks that are worth considering in the space are Alliant Energy Corporation (LNT - Snapshot Report) and Brookfield Infrastructure Partners L.P. (BIP - Snapshot Report), both with a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.55 +5.28%
RAMBUS INC RMBS 12.39 +5.09%
NETFLIX INC NFLX 346.06 +4.42%
E COMMERCE C DANG 12.61 +4.39%