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The Zacks Utility-Electric Power industry participants generate, transmit and distribute electricity to millions of customers across the United States. Utilities are gradually shifting toward cleaner energy sources and reducing carbon emissions, supported by government policies promoting cleaner power generation. At the same time, companies continue to modernize the grid and strengthen transmission and distribution networks to improve reliability. With hurricanes posing a recurring threat, sustained infrastructure investments are also enhancing grid resilience, reducing outage durations and supporting faster restoration of electricity following severe storms.
Entergy Corp., with an expanding clean energy portfolio, a growing customer base, solid renewable operations and a well-planned capital investment program aimed at strengthening infrastructure, remains well positioned for long-term growth and offers an attractive investment opportunity in the utility sector. Other utilities worth adding to your portfolio are FirstEnergy Corp., CenterPoint Energy and PPL Corp.
About the Industry
The Utility-Electric Power industry is responsible for generating, transmitting, distributing, storing and retailing electricity to consumers. Demand for utility services generally remains resilient across economic cycles, although extreme weather conditions can cause fluctuations in electricity consumption. The industry is also undergoing a major transformation as more utilities pursue zero-emission targets and expand cleaner generation portfolios.
Meanwhile, rising internet usage, increasing electric vehicle adoption, industrial reshoring and rapid growth in artificial intelligence are expected to drive substantial electricity demand, given the high-power requirements of AI-related workloads. However, elevated interest rates remain a key challenge for this capital-intensive industry by increasing financing costs for large infrastructure projects.
3 Major Trends Driving the Electric Power Industry Forward
Utilities Ramp Up Renewable Energy Expansion: U.S. electric power operators are steadily shifting toward cleaner sources of generation. According to the U.S. Energy Information Administration (“EIA”), renewables are projected to account for 25% of U.S. electricity generation in 2026, up from 24% in 2025, and rise further to 27% in 2027, supported by continued additions of solar and wind capacity.
The Inflation Reduction Act is expected to reinforce this transition by providing greater long-term certainty around federal clean energy incentives. This predictable policy support can improve earnings visibility and strengthen utilities’ decarbonization plans. At the same time, the expansion of large-scale battery storage projects is supporting renewable deployment by helping manage the intermittent nature of solar and wind generation.
Increasing Consumption and Prices for Electricity: Per the EIA, consumption of electricity is expected to increase in the United States. Consumption is expected to increase 2% in 2026 from 2025 levels and further increase 2% in 2027. Utility demand is strengthening as AI-focused data centers drive round-the-clock electricity consumption, while reshoring of semiconductor, battery and robotics manufacturing adds to industrial power requirements. At the same time, increasing adoption of electric vehicles and heat pumps is lifting electricity usage and encouraging continued investment in generation capacity and grid infrastructure.
Per EIA, the price of average electricity to be provided to customers in the industrial, commercial and residential sectors will increase 4.4%, 4.3% and 5.2%, respectively, in 2026. The same trend is expected to continue in 2027 as well, boosting revenues of the companies operating in this space.
Higher Rates to Raise Financing Costs for Utilities: A 25-basis-point increase in interest rates and the possibility of one more rate hike before year-end can pressure domestic-focused, capital-intensive regulated electric utilities by raising borrowing costs for large infrastructure and grid modernization programs. Higher financing expenses may weigh on earnings and cash flows, particularly for companies with sizable debt-funded capital plans. Although regulated utilities can seek recovery of prudent costs through future rate cases, the timing lag between spending and recovery can temporarily pressure returns and financial flexibility.
Zacks Industry Rank Indicates Bright Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat near-term prospects. The 62-stock Utility-Electric Power industry is housed within the broader Zacks Utilities sector and currently carries a Zacks Industry Rank #112, which places it in the top 45% of more than 247 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks Rank industries is a result of a positive earnings outlook for the constituent companies in aggregate. The industry’s recent earnings estimate of $3.13 as of Oct. 5, 2026, reflects year-over-year growth of 2.6%.
Before we present a few Utility-Electric Power stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and current valuation.
Electric Power Industry Lags S&P 500 But Beats Sector
The Utility-Electric Power industry has lagged the Zacks S&P 500 but outperformed its own sector over the past 12 months. The industry has lost 3.3%, narrower than its sector’s 4.9% decline. The Zacks S&P 500 composite has gained 16.1% in the same period.
Electric Power Industry's Current Valuation
The P/E F12M (Price/Earnings Forward 12 months) ratio is particularly useful for valuing electric power utilities, as their regulated operations produce reliable and consistent earnings. It provides a simple way to determine whether a stock is fairly valued compared with the industry peers.
The Utility-Electric Power industry is trading at 13.63X compared with the S&P 500’s 19.76X and the Utility sector’s 14.21X.
Over the past five years, the industry has traded as high as 17.43X, as low as 11.92X and at the median of 14.67X.
4 Utility-Electric Power Stocks to Watch and Accumulate
Utilities is a mature sector and all the stocks selected from the Zacks Utility-Electric Power industry have a market capitalization of more than $24 billion. The stocks currently have a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Entergy Corporation:New Orleans, LA-based Entergy Corporation is primarily engaged in electric power production and retail distribution of power. The company currently expects to invest $67 billion in the 2026-2029 time period to strengthen its operations. Entergy Corporation is adding more clean assets to its generation portfolio.
The company’s long-term (three to five years) earnings growth is pegged at 10.16%. ETR’s current dividend yield is 2.54%. The Zacks Consensus Estimate for Entergy Corporation’s 2026 and 2027 earnings indicates year-over-year growth of 12.53% and 15.38%, respectively. The Times Interest Earned (“TIE”) ratio of the company at the end of the second quarter was 2.5. A ratio greater than 1 indicates financial flexibility and the company’s capability to meet its interest obligation without any problem.
FirstEnergy Corp: Akron, OH-based FirstEnergy, its subsidiaries and affiliates, engages in the transmission, distribution and generation of electricity. The firm has successfully expanded its regulated activities and undergone a complete transition to become a fully regulated utility company in the past few years. FirstEnergy aims to invest $36 billion in the 2026-2030 period to strengthen its infrastructure and efficiently serve customers.
FE’s long-term earnings growth is pegged at 6.32%. The current dividend yield for FE is 4.26%. The Zacks Consensus Estimate for FirstEnergy’s 2026 and 2027 earnings per share indicates year-over-year growth of 7.45% and 7.74%, respectively. The TIE ratio of the company at the end of the second quarter was 2.3.
CenterPoint Energy: Houston, TX-based CenterPoint Energy provides electric transmission & distribution, natural gas distribution and competitive natural gas sales and services operations. The company is investing to expand its operations to meet increasing electricity demand, backed by expanding commercial activity. In the next 10 years, CenterPoint Energy plans to invest $66.7 billion to strengthen and expand its operations further.
The company’s long-term earnings growth is pegged at 7.93%. CNP’s current dividend yield is 2.54%. The Zacks Consensus Estimate for CenterPoint Energy’s 2026 and 2027 earnings implies year-over-year growth of 8.52% and 8.95%, respectively. The TIE ratio of the company at the end of the second quarter was 2.3.
PPL Corporation: Allentown, PA-based PPL provides electric and natural gas services to its customers. The company is experiencing rising demand from AI-based data centers operating in its service region. PPL continues to project $23 billion of regulated capital investment needs for the 2026-2029 period to strengthen its operations.
The company’s long-term earnings growth is pegged at 5.26%. PPL’s current dividend yield is 3.46%. The Zacks Consensus Estimate for PPL’s 2026 and 2027 earnings implies year-over-year growth of 7.18% and 8.77%, respectively. The TIE ratio of the company at the end of the second quarter was 2.8.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
View the Zacks #1 Rank List
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Zacks Industry Outlook Entergy, FirstEnergy, CenterPoint and PPL
For Immediate Release
Chicago, IL – October 7, 2026 – Today, Zacks Equity as Entergy Corp. (ETR - Free Report) , FirstEnergy Corp. (FE - Free Report) , CenterPoint Energy (CNP - Free Report) and PPL Corp. (PPL - Free Report) .
Industry: Utilities
Link: https://www.zacks.com/commentary/3001209/4-utility-stocks-to-buy-as-electric-power-industry-continues-to-grow
The Zacks Utility-Electric Power industry participants generate, transmit and distribute electricity to millions of customers across the United States. Utilities are gradually shifting toward cleaner energy sources and reducing carbon emissions, supported by government policies promoting cleaner power generation. At the same time, companies continue to modernize the grid and strengthen transmission and distribution networks to improve reliability. With hurricanes posing a recurring threat, sustained infrastructure investments are also enhancing grid resilience, reducing outage durations and supporting faster restoration of electricity following severe storms.
Entergy Corp., with an expanding clean energy portfolio, a growing customer base, solid renewable operations and a well-planned capital investment program aimed at strengthening infrastructure, remains well positioned for long-term growth and offers an attractive investment opportunity in the utility sector. Other utilities worth adding to your portfolio are FirstEnergy Corp., CenterPoint Energy and PPL Corp.
About the Industry
The Utility-Electric Power industry is responsible for generating, transmitting, distributing, storing and retailing electricity to consumers. Demand for utility services generally remains resilient across economic cycles, although extreme weather conditions can cause fluctuations in electricity consumption. The industry is also undergoing a major transformation as more utilities pursue zero-emission targets and expand cleaner generation portfolios.
Meanwhile, rising internet usage, increasing electric vehicle adoption, industrial reshoring and rapid growth in artificial intelligence are expected to drive substantial electricity demand, given the high-power requirements of AI-related workloads. However, elevated interest rates remain a key challenge for this capital-intensive industry by increasing financing costs for large infrastructure projects.
3 Major Trends Driving the Electric Power Industry Forward
Utilities Ramp Up Renewable Energy Expansion: U.S. electric power operators are steadily shifting toward cleaner sources of generation. According to the U.S. Energy Information Administration (“EIA”), renewables are projected to account for 25% of U.S. electricity generation in 2026, up from 24% in 2025, and rise further to 27% in 2027, supported by continued additions of solar and wind capacity.
The Inflation Reduction Act is expected to reinforce this transition by providing greater long-term certainty around federal clean energy incentives. This predictable policy support can improve earnings visibility and strengthen utilities’ decarbonization plans. At the same time, the expansion of large-scale battery storage projects is supporting renewable deployment by helping manage the intermittent nature of solar and wind generation.
Increasing Consumption and Prices for Electricity: Per the EIA, consumption of electricity is expected to increase in the United States. Consumption is expected to increase 2% in 2026 from 2025 levels and further increase 2% in 2027. Utility demand is strengthening as AI-focused data centers drive round-the-clock electricity consumption, while reshoring of semiconductor, battery and robotics manufacturing adds to industrial power requirements. At the same time, increasing adoption of electric vehicles and heat pumps is lifting electricity usage and encouraging continued investment in generation capacity and grid infrastructure.
Per EIA, the price of average electricity to be provided to customers in the industrial, commercial and residential sectors will increase 4.4%, 4.3% and 5.2%, respectively, in 2026. The same trend is expected to continue in 2027 as well, boosting revenues of the companies operating in this space.
Higher Rates to Raise Financing Costs for Utilities: A 25-basis-point increase in interest rates and the possibility of one more rate hike before year-end can pressure domestic-focused, capital-intensive regulated electric utilities by raising borrowing costs for large infrastructure and grid modernization programs. Higher financing expenses may weigh on earnings and cash flows, particularly for companies with sizable debt-funded capital plans. Although regulated utilities can seek recovery of prudent costs through future rate cases, the timing lag between spending and recovery can temporarily pressure returns and financial flexibility.
Zacks Industry Rank Indicates Bright Prospects
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat near-term prospects. The 62-stock Utility-Electric Power industry is housed within the broader Zacks Utilities sector and currently carries a Zacks Industry Rank #112, which places it in the top 45% of more than 247 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry’s positioning in the top 50% of the Zacks Rank industries is a result of a positive earnings outlook for the constituent companies in aggregate. The industry’s recent earnings estimate of $3.13 as of Oct. 5, 2026, reflects year-over-year growth of 2.6%.
Before we present a few Utility-Electric Power stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and current valuation.
Electric Power Industry Lags S&P 500 But Beats Sector
The Utility-Electric Power industry has lagged the Zacks S&P 500 but outperformed its own sector over the past 12 months. The industry has lost 3.3%, narrower than its sector’s 4.9% decline. The Zacks S&P 500 composite has gained 16.1% in the same period.
Electric Power Industry's Current Valuation
The P/E F12M (Price/Earnings Forward 12 months) ratio is particularly useful for valuing electric power utilities, as their regulated operations produce reliable and consistent earnings. It provides a simple way to determine whether a stock is fairly valued compared with the industry peers.
The Utility-Electric Power industry is trading at 13.63X compared with the S&P 500’s 19.76X and the Utility sector’s 14.21X.
Over the past five years, the industry has traded as high as 17.43X, as low as 11.92X and at the median of 14.67X.
4 Utility-Electric Power Stocks to Watch and Accumulate
Utilities is a mature sector and all the stocks selected from the Zacks Utility-Electric Power industry have a market capitalization of more than $24 billion. The stocks currently have a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Entergy Corporation:New Orleans, LA-based Entergy Corporation is primarily engaged in electric power production and retail distribution of power. The company currently expects to invest $67 billion in the 2026-2029 time period to strengthen its operations. Entergy Corporation is adding more clean assets to its generation portfolio.
The company’s long-term (three to five years) earnings growth is pegged at 10.16%. ETR’s current dividend yield is 2.54%. The Zacks Consensus Estimate for Entergy Corporation’s 2026 and 2027 earnings indicates year-over-year growth of 12.53% and 15.38%, respectively. The Times Interest Earned (“TIE”) ratio of the company at the end of the second quarter was 2.5. A ratio greater than 1 indicates financial flexibility and the company’s capability to meet its interest obligation without any problem.
FirstEnergy Corp: Akron, OH-based FirstEnergy, its subsidiaries and affiliates, engages in the transmission, distribution and generation of electricity. The firm has successfully expanded its regulated activities and undergone a complete transition to become a fully regulated utility company in the past few years. FirstEnergy aims to invest $36 billion in the 2026-2030 period to strengthen its infrastructure and efficiently serve customers.
FE’s long-term earnings growth is pegged at 6.32%. The current dividend yield for FE is 4.26%. The Zacks Consensus Estimate for FirstEnergy’s 2026 and 2027 earnings per share indicates year-over-year growth of 7.45% and 7.74%, respectively. The TIE ratio of the company at the end of the second quarter was 2.3.
CenterPoint Energy: Houston, TX-based CenterPoint Energy provides electric transmission & distribution, natural gas distribution and competitive natural gas sales and services operations. The company is investing to expand its operations to meet increasing electricity demand, backed by expanding commercial activity. In the next 10 years, CenterPoint Energy plans to invest $66.7 billion to strengthen and expand its operations further.
The company’s long-term earnings growth is pegged at 7.93%. CNP’s current dividend yield is 2.54%. The Zacks Consensus Estimate for CenterPoint Energy’s 2026 and 2027 earnings implies year-over-year growth of 8.52% and 8.95%, respectively. The TIE ratio of the company at the end of the second quarter was 2.3.
PPL Corporation: Allentown, PA-based PPL provides electric and natural gas services to its customers. The company is experiencing rising demand from AI-based data centers operating in its service region. PPL continues to project $23 billion of regulated capital investment needs for the 2026-2029 period to strengthen its operations.
The company’s long-term earnings growth is pegged at 5.26%. PPL’s current dividend yield is 3.46%. The Zacks Consensus Estimate for PPL’s 2026 and 2027 earnings implies year-over-year growth of 7.18% and 8.77%, respectively. The TIE ratio of the company at the end of the second quarter was 2.8.
Free: Instant Access to Zacks' Market-Crushing Strategies
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can tap into those powerful strategies – and the high-potential stocks they uncover – free. No strings attached.
Get all the details here >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.