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Entergy to Gain From Investments in Infrastructure Upgrade

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We have recently issued an updated research report on Entergy Corporation (ETR - Free Report) . The company delivered second-quarter 2018 adjusted earnings of $1.79 per share, surpassing the Zacks Consensus Estimate of $1.26 by 42.1%. However, the bottom line declined 42.4% from $3.11 in the year-ago period.

Entergy consistently focuses on disciplined investment in growth projects courtesy to its stable liquidity position, which is backed by a strong cash generation capacity. Also, the company continues to maximize its shareholder value through regular payment of dividends.

What’s Driving Entergy?

Entergy estimates its capital expenditures to be within $11.22 billion during the 2018-2020-time frame, which includes $4.25 billion for generation, $2.84 billion for distribution and $2.59 billion for transmission. The company plans to undertake various grid upgrades and asset replacement, which would drive its future earnings.

The company is pursuing growth opportunities in the generation business as it boasts a strong project pipeline coupled with a secured Louisiana Public Service Commission (LPSC) approval to replace 100 miles of pipe over the next 10 years.

Entergy New Orleans filed an application for approval from the City Council for three utility-scale solar projects totaling 90 megawatt (MW).  Once approved, the resource additions will allow the company to achieve its voluntary commitment of adding 100 MW of renewable energy resources. The projects are expected to come online during the 2020-2021 time period. A combination of such varied projects in the pipeline will enable the company to diversify its revenues stream.

The company maintains a stable liquidity position, backed by a strong cash generation capacity. For the second quarter, it generated cash from operating activities of $522.5 million, up from $290.3 million in the prior-year quarter. Entergy continues to focus on maximizing shareholder value through regular payment of dividends.

Estimates for Entergy have been revised upward over the past 30 days. Notably, the Zacks Consensus Estimate for the company’s 2018 earnings has moved 3.3% north to $6.27 per share. Also, the company’s bottom line surpassed the Zacks Consensus Estimate in three of the last four quarters with an average beat of 29.72%.

Zacks Rank & Key Picks

Entergy carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Some better-ranked stocks from the Zacks Utility – Electric Power Industry are as follows:

NRG Energy, Inc. (NRG - Free Report) sports a Zacks Rank #1. The stock has seen the Zacks Consensus Estimate for 2018 earnings per share move 3.5% north over the past 30 days to $4.14.

Algonquin Power & Utilities Corp. (AQN - Free Report) has a Zacks Rank #2 (Buy). The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 3% upward over the past 30 days to 68 cents per share.

Ameren Corporation (AEE - Free Report) carries a Zacks Rank of 2. The stock has seen the Zacks Consensus Estimate for 2018 bottom line per share being raised 5.3% over the past 30 days to $3.21.

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