Entergy Beats Both on Earnings & Revenues

Zacks

Entergy Corporation (ETR) posted fourth-quarter 2013 operational earnings of $1.00 per share, beating the Zacks Consensus Estimate by 6.4%. Quarterly earnings decreased 41.9% year over year, primarily due to higher total operating expenses and an increase in shares outstanding.

Excluding special items of 18 cents, the company’s quarterly GAAP earnings were 82 cents per share. The result was down 50.6% year over year.

For 2013, Entergy’s operational earnings were $5.36 per share, surpassing the Zacks Consensus Estimate by 3.3%. Annual earnings were 14% lower than the year-ago level.

The company’s GAAP earnings were $3.99 per share in 2013 compared with the prior-year figure of $4.76 per share.

Operational Results

In the quarter under review, Entergy’s total operating revenues of $2.7 billion surpassed the Zacks Consensus Estimate by 11.9%. Reported revenues surged 10.5% year over year, primarily due to improvement in revenues from Electric (up 15.3% year over year) and Natural gas (up 9.6% year over year) divisions. This was partially offset by lower contribution from Competitive businesses (down 5% year over year).

The company’s annual total operating revenues were $11.4 billion, beating the Zacks Consensus Estimate by 0.8%. Reported revenues increased 10.6% from the prior-year figure.

Segment Results

Utility: The segment’s quarterly earnings were $161.2 million on an as-reported basis and $153.7 million on an operational basis compared with $279.7 million on as-reported and $290.5 million on operational basis in fourth-quarter 2012. The year-over-year decrease was largely due to an increase in income tax expense and non-fuel operation and maintenance expenses, and higher depreciation expenses and other taxes.

Entergy Wholesale Commodities: Entergy Wholesale Commodities' as-reported earnings were $42.1 million while operational earnings were $85.6 million for fourth-quarter 2013. During the corresponding quarter last year, earnings on an as-reported as well as operational basis were $58.8 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 reported a loss of $56.3 million on as-reported basis and a loss of $60.0 million as an operational basis. This compares to a loss of $42.3 million on an as-reported and operational basis in the year-ago quarter. The sale of the company’s District Energy business negatively impacted quarterly results.

Financial Condition

As of Dec 31, 2013, Entergy’s total cash and cash equivalents were $0.7 billion compared with $0.5 billion at the end of 2012.

Long-term debt as of Dec 31, 2013 totaled $12.1 billion, up from $11.9 billion as of Dec 31, 2012.

For 2013, net cash flows provided by operating activities were $0.99 billion versus $0.7 billion in the year-ago comparable period.

Entergy’s capital expenditure was $0.5 billion in 2013 compared with $0.8 billion a year ago.

Guidance

Entergy maintained its 2014 earnings guidance in the range of $4.60 - $5.40 per share on an operational basis.

Peer Comparison

Exelon Corporation (EXC) announced fourth-quarter 2013 adjusted operating earnings of 50 cents per share, missing the Zacks Consensus Estimate by 5.7%.

Zacks Rank

Entergy currently has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the same industry include Integrys Energy Group, Inc. (TEG) and CMS Energy Corp. (CMS), each with Zacks Rank #2 (Buy).

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