Entergy Misses Q4 Earnings Expectation, Beats on Revenues

Zacks

Entergy Corporation (ETR) posted fourth-quarter 2014 operational earnings of 75 cents per share, below the Zacks Consensus Estimate of 83 cents by 9.6%. The reported number was also down 25% from $1.00 per share earned in the year-ago period. The downside was primarily due to soft performance at its Utility, Entergy Wholesale Commodities and Parent and Other segments.

2014 earnings came in at $5.83 per share, on an operational basis, missing the Zacks Consensus Estimate of $5.94. The reported number was, however, up 8.8% from $5.36 per share in the prior year.

Operational Results

In the quarter under review, Entergy’s total operating revenues of $2,831.3 million surpassed the Zacks Consensus Estimate by 11.6%. Reported revenues also increased 5.2% year over year primarily due to the improvement in Electric (2.7% year over year) and Competitive businesses (15.5%). It was partially offset by lower Natural Gas (down 2.4%) sales.

2014 total revenues were 9.7% higher year over year to $12,494.9 million. Yet, revenues failed to meet the Zacks Consensus Estimate of $12,630 million.

Segment Results

Utility: The segment’s quarterly earnings were $110.8 million on an operational basis compared with $153.7 million in fourth-quarter 2013. The decline was largely due to higher non-fuel operations and maintenance expenses and a higher effective income tax rate.

Entergy Wholesale Commodities (EWC): Entergy Wholesale Commodities' operational earnings were $70.9 million for fourth-quarter 2014. In the corresponding quarter last year, earnings were $85.6 million. The decline was primarily due to lower other income.

Parent & Other: In the reported quarter, the unit incurred a loss of $46.3 million on an operational basis. This is narrower than a loss of $60 million in the year-ago quarter. In the prior-year quarter the company had incurred a higher income tax expense due to the EWC District Energy sale.

Financial Condition

As of Dec 31, 2014, cash and cash equivalents stood at $1,422 million compared with $739 million at 2013 end. Total debt (excluding securitization) as of Dec 31, 2014 was $13.2 billion compared with $12.8 billion as of Dec 31, 2013.

Total operating cash flow in the reported quarter was $998 million compared with $990 million in the year-ago quarter. In 2014, cash flow increased $701 million year over year to $3,890 million.

Guidance

Entergy issued 2015 earnings guidance in the range of $5.10–$5.90 per share on an operational basis.

The company expects to invest $9.0 billion through 2015-2017, comprising $8.04 billion for Utility operations and $965 million for EWC.

Zacks Rank

Entergy currently has a Zacks Rank #3 (Hold).

Other Peer Releases

American Electric Power Company Inc. (AEP) reported fourth-quarter 2014 operating earnings of 48 cents per share, missing the Zacks Consensus Estimate of 52 cents by 7.7%. The quarterly figure also moved downward from the year-ago profit of 60 cents per share by 20%.

CMS Energy Corporation (CMS) reported fourth-quarter 2014 earnings per share of 35 cents on an adjusted basis. Quarterly earnings lagged the Zacks Consensus Estimate by a penny and declined 5.4% from the year-ago figure of 37 cents.

NextEra Energy, Inc. (NEE) announced fourth-quarter 2014 adjusted earnings of $1.03 per share, missing the Zacks Consensus Estimate of $1.04 by just a cent. On a year-over-year basis, earnings climbed 8.4% on the heels of higher revenues across all segments.

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