Entergy Corporation (ETR) announced that it expects pro forma and GAAP EPS of $ 1.37 in the first quarter of 2011. It affirmed its fiscal 2011 EPS guidance in the range of $ 6.35 to $ 6.85.
Entergy had reported pro forma and GAAP EPS of $ 1.33 and $ 1.12, respectively, in the first quarter of 2010. The expected 3.0% improvement in pro forma EPS in the quarter under review reflects higher earnings at the Utility partially offset by lower operational results at Entergy Wholesale Commodities (EWC) and Parent & Other. The forecast also reflects accretion from Entergy's share repurchase programs.
The anticipated rise in Utility earnings is a function of higher net revenue from increased weather-adjusted sales volume as well as pricing adjustments from previous rate actions. However, the sequential decline expected in pro forma earnings at EWC reflects lower net revenue and lower other income associated with decommissioning trusts.
Pro forma results for Parent & Other are also estimated to go down during the quarter due to several individual and insignificant items, including higher interest expense on Parent debt.
Entergy is well positioned through its geographically diverse mix of regulated and merchant operations. The company is the second largest U.S. nuclear power generator after Exelon Corporation (EXC). Entergy’s nuclear fleet, along with its complementary and flexible fossil and hydro fleet, gives it a distinct generation cost advantage over its fossil-fuel based competitors.
However, we are cautious about tepid growth at its competitive business on account of lukewarm power demand in the Northeast, along with pending regulatory approvals and the fate of its Vermont Yankee plant. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
The company is expected to release its first quarter 2011 earnings on April 29, 2011. The Zacks Consensus Estimate for first quarter 2011 is currently at $ 1.26, below the company’s expectation for the quarter. The present Zacks Consensus Estimate for fiscal 2011 is $ 6.57, which falls in the band forecast by the company.
New Orleans-based Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, and it is the second-largest nuclear generator in the United States. Entergy owns or manages 12 nuclear plants in the U.S., including the Vermont Yankee nuclear facility in Vermont. The company recently won a new 20-year license for Vermont Yankee. It also sued state officials to stop them from closing the plant in 2012.
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