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Why Is Entergy (ETR) Up 1.9% Since Last Earnings Report?

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A month has gone by since the last earnings report for Entergy (ETR - Free Report) . Shares have added about 1.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Entergy Q2 Earnings Beat Estimates, Revenues Up Y/Y

Entergy Corporation reported second-quarter 2018 adjusted earnings of $1.79 per share, which surpassed the Zacks Consensus Estimate of $1.26 by 42.1%. However, the reported figure declined 42.4% from $3.11 in the year-ago quarter.

Excluding a one-time tax benefit of 31 cents, the company’s GAAP earnings came in at $1.34 per share compared with $2.27 a year ago.

Revenues

In the quarter under review, revenues totaled $2.67 billion, which exceeded the Zacks Consensus Estimate of $2.55 billion by 4.5%. The top-line figure reflected year-over-year growth of 1.9% from $2.62 billion in the first quarter. The upside was driven by higher sales volume.

Segment Results

Utility: The segment’s quarterly adjusted earnings were $2.05 per share compared with $1.35 in the prior-year quarter.

Parent & Other: The segment incurred adjusted loss of 40 cents per share compared with 32 cents of loss in the prior-year quarter.

Entergy Wholesale Commodities (EWC): The segment reported adjusted earnings of 14 cents per share compared with $2.08 in the year-ago quarter.

Highlights of the Release
 
Interest expenses were $154.6 million in second-quarter 2018, up 6.4% from $145.2 million in the prior-year quarter.

In the reported quarter, total retail customers served by the company increased 0.5% to 2.9 million.

Financial Highlights

As of Jun 30, 2018, Entergy had cash and cash equivalents of $812.8 million compared with $781 million as of Dec 31, 2017.

At the end of second quarter, the company generated cash from operating activities of $522.5 million, up from $290.3 million in the prior-year quarter.

Guidance

For 2018, Entergy reaffirmed its operational earnings guidance in the band of $6.25-$6.85 per share.

The Utility, Parent & Other adjusted earnings are also expected to be in the range of $4.50-$4.90 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5.07% due to these changes.

VGM Scores

Currently, Entergy has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than momentum investors.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Interestingly, Entergy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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