Entergy Misses by a Nickel

Entergy Corporation (ETR - Analyst Report) in the third quarter of fiscal 2009 reported EPS of $2.40 -- a nickel below the Zacks Consensus EPS estimate of $2.45. Year-over-year EPS fell by a dime. The downside came from lower top line and higher expenses at its Utility, Parent & Other segment. This was partially offset by higher revenues at its Nuclear segment due to lower planned and unplanned outages and higher other income.

Utility, Parent & Other segment reported earnings of $259.6 million, or $1.32 per share, compared to $286.0 million, or $1.47 per share, in the year-ago quarter. Earnings were affected by the absence of income tax expense associated with the liquidation of a subsidiary and higher operation and maintenance expense.

Entergy Nuclear segment earned $210.7 million or $1.07 per share compared to $205.3 million, or $1.05 per share. Entergy Nuclear's earnings benefited as a result of higher revenue from higher generation due to fewer planned and unplanned outage days and increased other income primarily associated with decommissioning trust funds.

Entergy's Non-Nuclear Wholesale Assets business incurred a loss of $4.8 million or two cents per share compared to a loss of $21.0 million, or 11 cents per share, a year ago. Results improved due primarily to lower income tax expense.

Revenue fell in the reported quarter by 25.9% to $2.9 billion from $4 billion in the year-ago quarter, with Electricity down 31.6% and Natural Gas down 42.8% but Competitive Businesses up 0.7%. Residential sales increased 5.1% compared to the year-ago quarter. Entergy’s volume sales to industrial customers fell 6.3%, while overall volume loss was 0.7% in the quarter. However, the company was able to improve upon the overall headcount of customers year-over-year by 1.1%, barring the industrial customers which shrunk by 3.2%.

Entergy reaffirmed its fiscal 2009 earnings guidance in the range of $6.20 - $6.80 per share on an operational basis. We maintain our market Neutral recommendation on the shares.