Frigid Winter Drives Entergy Earnings Higher - Analyst Blog


Entergy Corporation ( ETR ) posted robust first-quarter 2014 earnings. Its operational earnings came in at $2.29 per share in the quarter, beating the Zacks Consensus Estimate by 8.5%. Quarterly earnings increased a considerable 143.6% year over year on the back of higher wholesale electricity prices owing to a frigid winter and pipeline infrastructure constraints in the Northeast U.S.

Excluding special items of 5 cents, the company's quarterly GAAP earnings were $2.24 per share. The result was up 148.9% year over year.

Operational Results

In the quarter under review, Entergy's total operating revenues of $3,208.8 million surpassed the Zacks Consensus Estimate by 15.5%. Reported revenues surged 23.0% year over year, primarily due to improvement in Electric (up 14.2% year over year), Natural Gas (up 46.7% year over year) and Competitive business (up 49.1% year over year) sales.

Segment Results

Utility: The segment's quarterly earnings were $201.1 million on an as-reported basis and $203.4 million on an operational basis compared with $123.5 million on as-reported and $129.8 million on operational in first-quarter 2013. The year-over-year increase was largely due to higher revenues as well as lower non-fuel operation and maintenance expenses.

Entergy Wholesale Commodities: Entergy Wholesale Commodities' as-reported earnings were $241.9 million while operational earnings were $248.5 million for first-quarter 2014. During the corresponding quarter last year, earnings on an as-reported as well as operational basis were merely $82.1 million. The improvement in operational earnings was primarily due to a rise in other income and lower income tax expenses.

Parent & Other: In the reported quarter, the unit incurred a loss of $41.9 million on both as-reported and an operational basis. This compares to a loss of $44.2 million on an as-reported and operational basis in the year-ago quarter.

Financial Condition

As of Mar 31, 2014, Entergy's total cash and cash equivalents were $908 million compared with $263 million at the end of first quarter 2013.

Long-term debt as of Mar 31, 2014 totaled $12.2 billion versus $12.1 billion as of Dec 31, 2013.

Total operating cash flow was $767 million versus $544 billion in the year-ago comparable period.

Entergy's capital expenditure was $483.4 million in the first quarter compared with $631.9 million a year ago.


Entergy recently boosted its 2014 earnings guidance to the range of $5.55-$6.75 per share on an operational basis.

Zacks Rank

We appreciate Entergy's steady effort towards reducing debt, thereby improving future margins. In addition, the company's stable cash position and strong cash-generating ability will help to meet the fund requirements for operational expansion.  

Entergy currently has a Zacks Rank #1 (Strong Buy). Other companies in the utility industry with a comparable Zacks Rank include CPFL Energia S.A. ( CPL ), NRG Energy, Inc. ( NRG ) and NRG Yield, Inc. ( NYLD ).

CPFL ENERGI-ADR (CPL): Free Stock Analysis Report

ENTERGY CORP (ETR): Free Stock Analysis Report

NRG ENERGY INC (NRG): Free Stock Analysis Report

NRG YIELD INC-A (NYLD): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CPL , ETR , NRG , NYLD

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