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Quarterly Earnings

Wrapping Up the Third-Quarter Results

By Roger S. Conrad, on Nov. 24, 2014

Entergy Corp’s third-quarter operating earnings came in 30.2 percent lower than a year ago, mostly because of a one-time regulatory charge of $0.23 in Mississippi, though mild weather and a slight uptick in costs didn’t help matters.

Nevertheless, the company remains on track to hit its full-year guidance for earnings per share of $5.55 to $6.75, excluding the aforementioned charge.

Highlights from the quarter included a better than 90 percent utilization rate for the utility’s nuclear power plants and industrial sales that grew by more than 5 percent from year-ago levels.

The company’s regulated utility operations will almost certainly benefit from Republican Asa Hutchinson’s victory in Arkansas gubernatorial race, while Martha Coakley’s defeat in Massachusetts could make life easier for the wholesale division’s Pilgrim nuclear power plant.

Entergy’s biggest regulatory issue, however, remains unresolved: relicensing the Indian Point nuclear plant in New York despite the opposition of reelected Gov. Andrew Cuomo.

And a proposed deal to shut down the Vermont Yankee nuclear power plant faces some uncertainty, given that Gov. Peter Schumlin’s slim lead in the gubernatorial race means that the state legislature will decide whether he stays in office.

The uncertainty surrounding Indian Point means that investors should resist the temptation to chase Entergy Corp above $75 per share. Once the nuclear power plant’s fate has been resolved, the utility could return to regular dividend growth.

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