Before the bell,
) reported its fourth quarter and full year 2012 results. In the
reported quarter, the company posted operational EPS of $1.72,
beating the Zacks Consensus Estimate of $1.41. Earnings also came
in higher than the year-ago quarter's 94 cents.
On a reported basis, including one-time items, earnings came in
at $1.66 for the reported quarter compared with 87 cents in the
Full year 2012 operational earnings came in at $6.23 per share,
beating the Zacks Consensus Estimate of $5.83. This, however,
came in lower than full year 2011 earnings of $7.62 per share.
On a reported basis earnings for full year 2012 came in at $4.76
per share versus $7.55 in 2011.
Revenue in the reported quarter fell 2.1% year over year to $2.4
billion, falling short of the Zacks Consensus Estimate of $3.2
billion. Of this Electricity revenue was down 1.7% to $1.8
billion, Natural Gas was down 5.0% to $37.4 billion, while
Competitive Businesses were down 3.4% to $568.0 billion.
On an operational basis, earnings were $307.0 million compared
with $167.2 million in the year-ago quarter; while on a reported
basis Entergy's earnings came in at $296.3 million compared with
$154.1 million in the year-ago quarter.
Full year 2012 revenue was $10.3 billion versus the Zacks
Consensus Estimate of approximately $11.0 billion. Full year
revenue also came below $11.2 billion generated a year ago.
Utility's quarterly earnings were $279.7 million on an
as-reported basis and $290.5 million on an operational basis,
compared with $169.7 million on both as-reported and operational
bases in fourth quarter 2011. The year-over-year increase was
largely due to lower income tax expense.
The reduction in income tax expense was driven by a settlement
with the IRS, completed at the end of 2012, regarding the tax
treatment of the utilities' decommissioning liabilities.
Entergy Wholesale Commodities
Entergy Wholesale Commodities' as-reported and operational
earnings were $58.8 million for fourth quarter 2012, compared
with $155.0 million for fourth quarter 2011. The year-over-year
decline was attributable to a higher effective income tax rate
and higher decommissioning expense. The higher decommissioning
expense was due to the benefit from an adjustment to the
decommissioning liability recorded in the fourth quarter of 2011.
Parent & Other
Parent & Other reported a loss of $42.3 million on both
as-reported basis and an operational basis for fourth quarter
2012. This compares to a loss of $170.6 million on an as-reported
basis and $157.5 million on an operational basis in fourth
quarter 2011. The narrower loss was driven by lower income tax
expense partially offset by higher interest expense.
Entergy in full year 2012 generated $2.9 billion from operating
activities compared with $3.1 billion in full year 2011. Cash and
cash equivalents at the end of the reported period were $532.6
million versus $694.4 million at year-end 2011. Long-term debt
increased to $11.9 billion compared with slightly above $10.0
billion at year-end 2011.
Entergy reaffirmed its previously issued 2013 earnings guidance
in the range of $4.60 to $5.40 per share on both an as-reported
basis and an operational basis. The company also noted it
currently expects 2013 earnings on the lower half of the guidance
range due to updated pension and post-retirement cost estimates,
which include an approximate 75 basis point decrease in the
discount rate assumption.
New Orleans-based Entergy Corp. is primarily engaged in electric
power production and retail distribution of power. With 30,000MW
of generating capacity, it distributes electricity to 2.8 million
customers in Arkansas, Louisiana, Mississippi and Texas. Of this,
14,631MW are gas/oil based, 2,259 are coal based, 70MW are hydro
based and the rest are nuclear based.
The company also distributes natural gas to 240,000 customers
in Louisiana. Entergy is the second largest U.S. nuclear power
ENTERGY CORP (ETR): Free Stock Analysis
EXELON CORP (EXC): Free Stock Analysis Report
ITC HOLDINGS CP (ITC): Free Stock Analysis
PIKE ELECTRIC (PIKE): Free Stock Analysis
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Entergy had earlier, in Dec 2011, entered into a definitive
ITC Holdings Corporation
), under which the former will divest its electric transmission
business to the latter for gross cash of $1.775 billion. The
divested business would be merged with the operations of ITC
Holdings. The company expects the transaction to complete by
Entergy is well positioned with its geographically diverse mix of
regulated and merchant operations. The company is focused on
maximizing its shareholder value through steady investment for
rate base growth, as well as through its ongoing stock buyback
program and incremental dividend.
However, we are concerned regarding the tepid growth of its
competitive business due to lukewarm power demand in the
Northeast, pending regulatory approvals and the fate of its
Indian Point plant.
Entergy has a short-term Zacks Rank #3 (Hold rating) in view of
the continued weak economic environment in the U.S. which will
weigh on the company's power sales.
As of now we would advise investors to focus on Zacks Rank #1
(Strong Buy) electric power utility
Pike Electric Corporation