Integrated energy company,
) provided fourth-quarter 2012 preliminary operational earnings
expectation of approximately $1.71 per share and as-reported
earnings expectation of approximately $1.65 per share. Results
for fourth-quarter 2011 were as-reported earnings of 87 cents per
share and operational earnings of 94 cents per share.
CENTERPOINT EGY (CNP): Free Stock Analysis
ENTERGY CORP (ETR): Free Stock Analysis
EXELON CORP (EXC): Free Stock Analysis Report
ITC HOLDINGS CP (ITC): Free Stock Analysis
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The increase in fourth-quarter 2012 earnings reflects upside in
the Utility and Parent & Other segments. This would be
partially offset by lower earnings at Entergy Wholesale
The quarter-over-quarter increase in Utility fourth quarter 2012
operational earnings reflected lower income tax expense. Higher
net revenue also contributed to the Utility earnings improvement,
driven by volume and price. Both comparable periods had roughly
similar negative weather effects. On a weather-adjusted basis,
retail sales were higher, driven by growth in the residential and
commercial segments. Partially offsetting these items was an
increase in depreciation expense.
Entergy Wholesale Commodities (EWC)
The quarter-over-quarter decrease in earnings at Entergy
Wholesale Commodities was due to lower net revenue and increases
in income tax and decommissioning expenses. EWC net revenue
declined due to lower pricing for the nuclear fleet. Higher
decommissioning expense was incurred this quarter versus the
prior year due to the benefit from an adjustment to the
decommissioning liability recorded in the fourth quarter of 2011.
Parent & Other
At Parent & Other, operational results improved during the
quarter due to a decrease in income tax expense on Parent &
Other activities. This was partially offset by higher interest
Entergy affirmed its 2013 operational earnings guidance in the
range of $4.60 to $5.40 per share. Entergy noted it currently
expects earnings to be on the lower half of the operational
guidance range due to updated pension and post-retirement cost
estimates, which include an approximate 75 basis point decrease
in the discount rate assumption.
Entergy had earlier, in December 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. Recently, Entergy Arkansas Inc. along with ITC Holdings
Corp. and ITC Midsouth LLC, filed a request at the Arkansas
Public Service Commission to spin off the Arkansas electric
transmission business and merge it into a subsidiary of ITC. The
company expects the transaction to complete by 2013.
Entergy is expected to release its fourth-quarter 2012 earnings
on Feb 8, 2013. The Zacks Consensus Estimates for fourth-quarter
2012 and fiscal 2012 are currently pegged at 96 cents per share
and $5.49 per share, respectively.
New Orleans, Louisiana based Entergy is primarily engaged in
electric power production and retail distribution of power. With
30,000MW of generating capacity, the company 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 generator after
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 faces stiff competition from
CenterPoint Energy Inc.
). The latter is also focusing hard on the development of its
pipeline assets. Entergy has a short-term Zacks #3 Rank (Hold
rating) in view of the continued weak economic environment in the
U.S. which will weigh on the company's power sales.