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Entergy (ETR) Up 6.4% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Entergy (ETR - Free Report) . Shares have added about 6.4% in that time frame, underperforming the S&P 500.

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

Entergy Q3 Earnings Beat Estimates, Revenues Rise Y/Y

Entergy reported third-quarter 2022 adjusted earnings of $2.84 per share, which surpassed the Zacks Consensus Estimate of $2.67 by 6.4%. The reported figure also increased 15.9% from $2.45 per share in the year-ago quarter.

Entergy reported GAAP earnings of $2.74 per share compared with $2.63 per share a year ago.

Total Revenues

Entergy’s third-quarter revenues of $4,218.6 million exceeded the Zacks Consensus Estimate of $3,349.9 million by 25.9%. Further, revenues increased 25.8% from $3,353.5 million in the year-ago quarter due to higher Electric and Natural gas revenues.

Segment Results

Utility: The segment’s quarterly earnings came in at $3.29 per share compared with $2.82 in the prior-year quarter.

Parent & Other: The segment incurred a loss of 45 cents per share compared with a loss of 32 cents in the prior-year quarter.

Highlights of the Release

Operating expenses in the third quarter were $3.26 billion, up 29.2% from $2.53 billion in the year-ago quarter.

The operating income during the quarter totaled $954.7 million, up 15.4% from $827.9 million in the year-ago quarter.

Total interest expenses were $235.3 million, up 8.6% from $216.6 million in the year-ago quarter.

As of Sep 30, 2022, total retail customers served by the company increased 0.5% to 3 million.

Financial Highlights

As of Sep 30, 2022, Entergy had cash and cash equivalents of $1,003.5 million compared with $442.6 million as of Dec 31, 2021.

Long-term debt was $24.64 billion as of Sep 30, 2022 compared with $24.84 billion as of Dec 31, 2021.

In the third quarter of 2022, ETR generated cash from operating activities of $993.5 million compared with cash inflow from operating activities of $1,264.4 million in the third quarter of 2021.

Guidance for 2022

For 2022, Entergy narrowed its adjusted earnings guidance to the range of $6.25-$6.45 compared with the prior range of $6.15-$6.45. The Zacks Consensus Estimate for the company’s earnings is currently pegged at $6.40 per share, which is higher than $6.35, the midpoint of the guided range.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -9.78% due to these changes.

VGM Scores

At this time, Entergy has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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 is part of the Zacks Utility - Electric Power industry. Over the past month, Edison International (EIX - Free Report) , a stock from the same industry, has gained 12.1%. The company reported its results for the quarter ended September 2022 more than a month ago.

Edison International reported revenues of $5.23 billion in the last reported quarter, representing a year-over-year change of -1.3%. EPS of $1.48 for the same period compares with $1.69 a year ago.

Edison International is expected to post earnings of $1.06 per share for the current quarter, representing a year-over-year change of -8.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +8.4%.

Edison International has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.


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