We expect Entergy Corporation ETR to beat expectations when it reports second-quarter 2015 results before the opening bell on Aug 4. In the last quarter, the company posted a positive earnings surprise of 29.23%.
Why a Likely Positive Surprise?
Our proven model shows that Entergy Corporation is likely to beat earnings because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, currently stands at +1.77%. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank #3 (Hold): The combination of Entergy Corporation’s Zacks Rank #3 and positive ESP makes us reasonably confident of a positive earnings beat when it reports results on Aug 4.
Note that stocks with Zacks Ranks #1, 2 and 3 have a significantly higher chance of beating earnings. Sell-rated stocks (#4 and 5), however, should never be considered going into an earnings announcement.
What is driving the Better-than-Expected Results?
Entergy’s geographically diversified mix of regulated and merchant operations insulates it from regulatory bottlenecks and power-price volatility in a particular region. By first-quarter 2015, the company had recorded seven straight quarters of 2.9% industrial sales growth. For 2015, Entergy projected overall retail sales growth (weather adjusted) of 2.7% and industrial sales growth of 4.4% at its Utility business in 2015.
Entergy’s steady efforts on cost curtailment will help to improve margins. The company completed its first full-year operation in Midcontinent Independent System Operator (MISO), which is turning out to be a great cost-saving initiative for its customers.
For 2015, Entergy affirmed its 2015 earnings guidance in the range of $5.10–$5.90 per share on an operational basis.
Other Stocks to Look For
Here are some other companies you may want to consider as our model shows that they too have the right combination of elements to post an earnings beat this quarter:
Consolidated Edison, Inc. ED with an Earnings ESP of +1.56% and a Zacks Rank #3.
NRG Energy, Inc. NRG with an Earnings ESP of +40% and a Zacks Rank #3.
UIL Holdings Corporation UIL with an Earnings ESP of +7.14% and a Zacks Rank #3.
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