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Is Entergy Corporation (ETR) Poised to Beat on Q3 Earnings?

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Entergy Corporation (ETR - Free Report) will release third-quarter 2018 results on Oct 31, before the opening bell.

In the prior reported quarter, the company delivered a positive earnings surprise of 42.06%. Moreover, Entergy surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with a positive average beat of
29.72%.

Let’s see how things are shaping up prior to this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Entergy is likely to beat earnings estimates in the third quarter. Notably, a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen.

Earnings ESP: Entergy has an Earnings ESP of +3.60%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Entergy carries a Zacks Rank #3, which along with a positive Earnings ESP, increases the possibility of an earnings beat.

Conversely, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Entergy Corporation Price and EPS Surprise

Entergy Corporation Price and EPS Surprise | Entergy Corporation Quote

Factors Under Consideration

The company's service territories witnessed above normal temperatures, during most of the third quarter. Moreover, a total of 251 storm reports were recorded across Texas, Oklahoma, Arkansas, Louisiana, Tennessee, and Mississippi during August, which may have caused a few outages, resulting in the disruption of smooth power supply. As a result, temperature is most likely to hurt Entergy's revenues in the to-be-reported quarter.

In line with this, the Zacks Consensus Estimate of $2.85 billion for Entergy’s third-quarter sales reflects a year-over-year decline of 12.2%.

During the first quarter's earnings call, Entergy had mentioned regarding an assumption of a $100-million favorable tax item at Entergy Wholesale Commodities (EWC), which the company anticipated to get materialized in the third quarter. This, in turn, may boost its quarterly bottom line.

Furthermore, Entergy expects macroeconomic factors to boost industrial growth in its service territories, which, in turn, should improve demand for electricity. We may expect the upcoming results to duly reflect these developments. Considering this, the Zacks Consensus Estimate for Entergy’s third-quarter earnings of $2.73 reflects an annual rise of 16.2%.

Stocks That Warrant a Look

Here are a few operators in the Utility space you may consider, as our model shows that they have the right combination of elements to deliver an earnings beat this quarter:

The AES Corp. (AES - Free Report) has an Earnings ESP of +1.43% and a Zacks Rank #2. The company is scheduled to report third-quarter results on Nov 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ameren Corporation (AEE - Free Report) has an Earnings ESP of +8.65% and a Zacks Rank #2. The company is scheduled to report third-quarter results on Oct 31.

Alliant Energy (LNT - Free Report) has an Earnings ESP of +1.19% and a Zacks Rank #3. The company is scheduled to report third-quarter results on Nov 6.

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