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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
ETR — frequently asked questions
Is Entergy Corporation overvalued?
In our latest published analysis dated 2026-10-02, ETR looks meaningfully overvalued. The price recorded at analysis is 101 USD versus our fair value of 77,6 USD; the high endpoint is presented separately as potential value of 94,1 USD. That implies roughly 23.1% downside to fair value at that date.
Our latest published report, analyzed 2026-10-02, gives ETR a fair value of 77,6 USD and a potential value of 94,1 USD. The conclusion is triangulated across multiple valuation models and weighted by reliability for Entergy Corporation's archetype; it is a dated research output, not a live price.
Should I buy ETR now?
Our latest published rating for ETR, analyzed 2026-10-02, is Sell. Entergy Corporation looks meaningfully overvalued at the analysis-date price of 101 USD versus fair value of 77,6 USD; potential value is 94,1 USD. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for ETR?
The dedicated bear-case section in our report analyzed 2026-10-02 documents Entergy Corporation's material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is ETR's rating?
Our latest published rating for ETR, analyzed 2026-10-02, is Sell, with a published moat assessment of 6.5/10 (Narrow). It reflects our fair value of 77,6 USD, the potential value of 94,1 USD, and the price recorded at analysis (101 USD).
Este informe aún no se ha traducido. Actualice en unos minutos una vez que la cola de traducción se ponga al día.
§1 Resumen ejecutivoEN
Respuesta en 30 segundosSell
Precio frente a valor
Precio
$100.94
Valor razonable
$77.58
Valor potencial
$94.10
A fecha de
2026-10-02
Por qué puede funcionar
Accelerated industrial electrification, LNG export facility buildouts, and cloud data center interconnections across the Gulf Coast expand utility sales beyond the consensus FY2027 forecast of $15,294,136,640.
Qué cambiaría nuestra opinión
Refinancing yields across Entergy's debt portfolio rise above 7.50% or state utility commissions in Arkansas and Louisiana disallow cost recovery on grid transformation projects.
We rate Entergy Corporation as Sell, as the report-date share price of $100.94 stands 30.11% above our Fair value of $77.58, offering an implied return of -23.14% that fails to compensate investors for elevated debt burden and severe cash burn during its grid transformation buildout.4,5
Our Sell rating indicates that investors should trim or avoid Entergy shares at current levels. For an ordinary investor, this recommendation means the stock is priced ahead of its underlying business value, offering negative risk-adjusted expected return with elevated vulnerability to rising interest expense and capital execution headwinds.
The report was prepared when Entergy shares traded at $100.94 on October 2, 2026. Our valuation establishes a Fair value of $77.58 per share, representing an implied return of -23.14%. Even under our optimistic of $94.10, the stock remains 7.27% above the highest justified valuation, indicating that market expectations have outrun the economic reality of the utility's capital spending cycle.
The principal risk to Entergy's financial profile stems from persistent high capital expenditure driving sustained negative cash flows alongside heavy debt refinancing obligations. The company deployed $7,684,922,000 in FY2025 capital spending against operating cash flow of $5,150,651,000, creating negative free cash flow of -$2,534,271,000. If interest rates remain elevated at a 5.26% risk-free benchmark, refinancing costs across Entergy's $34,627,321,856 total debt portfolio will escalate annual interest expense, compress profit margins, and force dilutive equity offerings that directly erode per-share equity value.2,4,5,6
The primary reason Entergy's business can create equity value is that its state-regulated monopoly franchises in Arkansas, Louisiana, Mississippi, and Texas allow prudently incurred investments to expand its regulated rate base. Its Utility segment generates 99.55% of revenue ($12,887,921,000 in FY2025) and delivers a strong 24.73% operating margin. Expanding industrial demand from petrochemical facilities and data centers along the Gulf Coast is projected to lift revenue to $15,294,136,640 and diluted earnings per share to $5.10 by FY2027. If regulators grant prompt rate-base inclusion and capital spending normalizes toward depreciation, cash generation would rebound toward our Potential value of $94.10, although this outcome remains well below the October 2, 2026 share price of $100.94.1,4,6,7
Efficient Scale in Electric Grid Infrastructure
Entergy controls an extensive, integrated electric transmission and distribution infrastructure across Arkansas, Louisiana, Mississippi, and Texas, generating $12,887,921,000 in utility revenue (99.55% of consolidated revenue),. Replicating this high-voltage transmission grid and localized distribution network would require tens of billions of dollars in prohibitive upfront capital ($7,684,922,000 deployed in FY2025 capex alone), rendering competitive parallel infrastructure economically unviable.6,7
Regulated Franchise Monopolies and Service Licenses
Retail electric operations are legally protected by state regulatory commissions (APSC, LPSC, MPSC, PUCT) granting exclusive territorial franchises that prohibit retail competition from peer utilities such as AEP, DUK, SO, or XEL. This regulatory framework protects Entergy's 24.73% operating margin ($3,202,278,000 operating income on $12,946,686,000 revenue in FY2025,) from merchant pricing pressures.6
Cycle upside
An upcycle in the regulated utility industry is characterized by surging power demand driven by data center interconnects, petrochemical electrification, and manufacturing reshoring. Regulators support rapid capital deployment with forward-looking formula rate plans and construction work in progress riders, enabling timely earnings recognition on expanding rate bases while wholesale market stability keeps customer rate impacts manageable.
Recomendación de la casa
We rate Entergy Corporation as Sell because the share price of $100.94 trades at an unsustainable 30.11% premium to our Fair value of $77.58, exposing investors to -23.14% implied return while capital spending outlays generate persistent negative free cash flow.4,5
Descripción general de la empresa
Entergy operates primarily through a single reportable segment, Utility. The Utility segment includes five retail electric utility subsidiaries: Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas. These companies generate, transmit, distribute, and sell electric power to retail and wholesale customers in Arkansas, Louisiana, Mississippi, and Texas. (f)In December 2013, Entergy integrated its transmission system into the MISO RTO. Entergy offers or self-schedules its generation into the MISO energy market on a day-ahead and real-time basis and bids for power in the MISO energy market to serve the demand of its customers.
Entergy then operates its
§2 Caso bajistaEN
A severe stress scenario combines macroeconomic headwinds and regulatory frictions: persistent elevated interest rates expand pre-tax debt servicing costs across Entergy's $34,627,321,856 total debt burden, while state utility commissions in Louisiana, Arkansas, Mississippi, or Texas disallow capital recovery on portions of the $7,684,922,000 transformation build. This combination compresses net margins below the observed 13.70% baseline ($1,773,328,000 net income on $12,946,686,000 revenue in FY2025,). Unbudgeted storm restoration outlays along the Gulf Coast further exacerbate negative free cash flow (-$2,534,271,000 in FY2025), forcing dilutive equity issuances that suppress EPS toward the lower consensus estimate of $5.00 in FY2027 and driving equity valuation toward the conservative lower boundary of $62.74.
Severe regulatory prudence disallowances on capital projects
Prolonged high interest rate environment increasing debt expense
Disruptive storm restoration spending without prompt rate relief
The Bear scenario reflects the downside risk that capital deployment encounters regulatory disallowances, protracted rate-case lag, or reductions in authorized returns on equity. Simultaneously, persistent high interest rates elevate debt servicing costs across the substantial debt portfolio, while severe coastal weather necessitates emergency repair spending that widens the free cash flow deficit. In this environment, equity dilution accelerates to protect credit metrics, suppressing per-share earnings growth. Investors would recognize this outcome if formula rate filings face severe commission pushback or if emergency storm financing strains holding company liquidity.
Cómo puede fallar esta tesis
Cost of capital surge driven by persistent higher interest rates and refinancing spread widening across $34.63B debt portfolio.
Entergy carries $34,627,321,856 in total debt with a risk-free rate of 5.26%. A 200 bps increase in cost of capital pushes Ke to 8.91% from 6.91%, sharply depressing equity valuation models across DDM (-31.5%), discounted earnings (-31.0%), and multi-stage moat fade (-31.9%).2,4
FV impact
-20.4%
Cost of capital 2 points higher
Señales de alerta temprana a vigilar
Los cinco acontecimientos que debilitarían nuestra tesis de inversión.
Capital expenditure inflation exceeds regulatory rate-base absorption capacity, leading to commission disallowances, widening negative free cash flow beyond -$2,534,271,000, and balance-sheet leverage stress.
Actual:3.13x (capex of $7,684,922,000 vs depreciation of $2,305,568,000)
§3 Foso competitivoEN
Narrow
Entergy Corporation derives a narrow economic moat primarily from efficient scale in regional electric transmission and distribution assets alongside state-granted monopoly utility franchises across Arkansas, Louisiana, Mississippi, and Texas. The company's regulated Utility segment accounts for 99.55% of consolidated revenues ($12,887,921,000 out of $12,946,686,000 in FY2025,), insulating operational earnings from retail peer competition. Regional peers including American Electric Power (AEP, operating margin 23.25%), Duke Energy (DUK, operating margin 27.50%), and Southern Company (SO, operating margin 29.61%) operate in geographically distinct service territories, precluding direct consumer switching.
The structural advantage of efficient scale prevents competitor entry because duplicating Entergy's physical poles, wires, substations, and generation fleet would require massive duplicate capital deployment that regulatory compacts disallow and financial markets would not fund. Entergy's ongoing transformation build program deployed $7,684,922,000 of capital expenditure in FY2025 (3.13x D&A), expanding its regulated asset base to support industrial electrification and storm resilience along the Gulf Coast. However, because rate regulators cap authorized returns on equity near the company's cost of capital, latest ROIC (5.47%) tracks slightly below WACC (6.20%), confirming that Entergy earns regulated utility returns rather than wide, excess economic profits.
Beneficio económico
Entergy's trailing ROIC of 5.47% tracks slightly below its computed WACC of 6.20% due to heavy unrecovered capital outlays during the peak of its transformation build program ($7,684,922,000 capex deployed in FY2025). In regulated electric utilities, economic profit is bounded by state utility commission authorized returns on equity (baseline ROE of 10.25%) rather than unconstrained monopoly pricing, supporting a narrow rather than wide moat classification.2,6
6.5/ 10
Narrow
Sources of advantage
01Efficient Scale in Electric Grid Infrastructure — Entergy controls an extensive, integrated electric transmission and distribution infrastructure across Arkansas, Louisiana, Mississippi, and Texas, generating $12,887,921,000 in utility revenue (99.55% of consolidated revenue),. Replicating this high-voltage transmission grid and localized distribution network would require tens of billions of dollars in prohibitive upfront capital ($7,684,922,000 deployed in FY2025 capex alone), rendering competitive parallel infrastructure economically unviable.Wide
02Regulated Franchise Monopolies and Service Licenses — Retail electric operations are legally protected by state regulatory commissions (APSC, LPSC, MPSC, PUCT) granting exclusive territorial franchises that prohibit retail competition from peer utilities such as AEP, DUK, SO, or XEL. This regulatory framework protects Entergy's 24.73% ($3,202,278,000 on $12,946,686,000 in FY2025,) from merchant pricing pressures.
Amenazas conocidas al foso
Amenaza
Severidad
Cronograma
Mitigación
Regulatory prudence disallowances, rate-case lag, or downward adjustments in authorized return on equity on the $7,684,922,000 annual capital expenditure program.
high
12-24 months
Extensive utilization of formula rate plans, forward-looking test years, pre-approval of major grid hardening projects, and collaborative regulatory proceedings focused on industrial reliability.
The highlighted cell is Fair value when every assumption sits at its base level ($77.58). Each row and column shows what Fair value becomes when one assumption moves.
Orderly debt refinancing and steady retail electricity volume demand
Under the Base scenario, assigned a probability of 65.0%, the shares reach a target of $77.58, implying a return of -23.1% relative to $100.94. This path assumes that Entergy successfully executes its capital transformation program with state regulatory commissions approving rate base inclusion under formula rate plans. Operating margins remain stable, insulated from peer retail competition across Arkansas, Louisiana, Mississippi, and Texas. Revenue and earnings per share compound through FY2026 and FY2027 supported by ongoing Gulf Coast industrial electrification. This scenario would be disconfirmed if regulatory lag widens or if industrial interconnection demand stalls before FY2027.
Upgrade the rating; Re-examine capital recovery rider execution and industrial load interconnection pace before adjusting risk exposure.
Disparador: Diluted earnings per share exceeding the upper consensus band for FY2026 alongside faster than scheduled rate-base inclusion and positive industrial load additions across the Gulf Coast
A significant earnings beat accompanied by accelerated commission approvals would improve forward cash generation, though $100.94 would still trade well above $77.58.
Disparador: Operating results meeting consensus projections for FY2026 revenue and earnings per share with capital deployment tracking authorized formula rate plans
Meeting expectations confirms steady rate base expansion but leaves the shares fundamentally overvalued relative to $77.58.
Fallo
Maintain Sell; Accelerate portfolio trimming and reassess authorized return on equity assumptions across operating subsidiaries.
Disparador: Diluted earnings per share falling below consensus expectations for FY2026 driven by regulatory prudence disallowances, higher storm restoration expenses, or industrial volume softness
An earnings miss driven by regulatory pushback or unrecovered capital costs would widen the gap between market valuation and underlying cash generation.
Calidad de los beneficios
Earnings quality reflects regulated accrual utility accounting where operating income is anchored by state-authorized rate base returns. Trailing operating cash flow reliably covers net income, but high capital expenditure for grid transformation creates a substantial cash deficit before financing. Receivables and regulatory assets reflect formula rate plan adjustments and fuel cost recovery mechanisms rather than commercial revenue recognition risk.
ActualSubstantially elevated relative to baseline depreciation during active grid modernization across FY2025 and FY2026.
Por qué importa
Measures whether the capital build pace remains sustainable and absorbable by state regulatory commissions without triggering prudence disallowances or excessive balance sheet leverage.
Cash flow generation demonstrates strong regulated operational strength offset by peak reinvestment intensity. Operating cash flow reached $5,150,651,000 in FY2025, comfortably exceeding reported net income of $1,773,328,000 and reflecting healthy operational cash conversion. However, transformation capex of $7,684,922,000 created negative free cash flow of -$2,534,271,000. Normalizing maintenance capital expenditure at 35.00% of capex ($2,689,722,700), closely aligned with trailing depreciation of $2,305,568,000, yields normalized owner earnings of $1,389,173,300 ($2.91 per share), demonstrating that true distributable cash flow remains positive when separating baseline maintenance from growth buildout outlays.
The 73 basis point deficit of ROIC relative to WACC reflects peak transformation capital deployment ($7,684,922,000 in FY2025) expanding invested capital before assets enter commercial service. Under regulated formula rate plans, completed infrastructure is folded into the rate base to earn state-authorized returns on equity (10.25% baseline), allowing ROIC to converge toward WACC as capital expenditure moderates toward depreciation over the five-year forecast horizon.
Entergy's trailing ROIC of 5.47% trails its computed WACC of 6.20% by 73 basis points.
Accelerated transformation buildout creates substantial near-term cash burn before rate base inclusion.
Capex surged from $4,440,652,000 in FY2023 to $4,838,339,000 in FY2024 and $7,684,922,000 in FY2025, exceeding operating cash flow ($5,150,651,000) and driving free cash flow to -$2,534,271,000.
Ingresos más recientes12,9 mil M US$CAGR de ingresos +2,0 %
Margen operativo24,7 %10 periodos fiscales
Flujo de caja libre más reciente-2534,3 M US$FY2025
Deuda neta26,5 mil M US$FY2025
Desglose de la cuenta de resultadosCómo la escala del negocio se convierte en beneficio declarado.30 jun 2026
StockMarketAgent.AI
Ingresos3523,6 M US$Coste de ventas−2474,1 M US$Beneficio bruto1049,5 M US$Gastos operativos−214,8 M US$Beneficio operativo834,7 M US$Partidas no operativas e impuestos−346,9 M US$Beneficio neto487,8 M US$
Datos del historial financiero
Ingresos
3.523.638.000 US$
Coste de ventas
2.474.139.000 US$
Beneficio bruto
1.049.499.000 US$
Gastos operativos
214.770.000 US$
Beneficio operativo
834.729.000 US$
Partidas no operativas e impuestos
-346.909.000 US$
Beneficio neto
487.820.000 US$
Resumen del balanceCómo se mantienen y financian los activos declarados en el período seleccionado.
StockMarketAgent.AI
Composición de activosFinanciado por
Activos totales71,9 mil M US$Efectivo1928,9 M US$Activos corrientes5806,9 M US$Pasivos totales54,6 mil M US$Pasivos corrientes7823 M US$Patrimonio neto17 mil M US$
Datos del desglose del balance
Activos totales
71.890.730.000 US$
Efectivo
1.928.916.000 US$
Activos corrientes
5.806.851.000 US$
Pasivos totales
54.622.153.000 US$
Pasivos corrientes
7.822.968.000 US$
Patrimonio neto
17.014.167.000 US$
Puente de flujo de cajaCómo el flujo de caja operativo se convirtió en flujo de caja libre en FY2025.
StockMarketAgent.AI
Conciliación del flujo operativo
Beneficio neto1773,3 M US$Depreciación y amortización+2305,6 M US$Otros ajustes operativos+1071,8 M US$Flujo de caja operativo5150,7 M US$
Conciliación del efectivo inicial al final
Efectivo inicial859,7 M US$Flujo de caja operativo+5150,7 M US$Flujo de inversión−7109,5 M US$Flujo de financiación+3028 M US$Efectivo final1928,9 M US$
5150,7 M US$ − 7684,9 M US$Flujo de caja libre -2534,3 M US$
Datos del puente de flujo de caja
Beneficio neto
1.773.328.000 US$
Entrada operativa
5.150.651.000 US$
Depreciación y amortización
2.305.568.000 US$
Otros ajustes operativos
1.071.755.000 US$
Flujo de caja operativo
5.150.651.000 US$
Efectivo disponible
9.038.370.000 US$
Efectivo inicial
859.703.000 US$
Entrada de financiación
3.028.016.000 US$
Salida de inversión
7.109.454.000 US$
Efectivo final
1.928.916.000 US$
Flujo de inversión
-7.109.454.000 US$
Flujo de financiación
3.028.016.000 US$
Ingresos por segmento operativoProporción de los ingresos totales de 2025-12-31.
12,9 mil M US$Ingresos totales
Ingresos por segmento operativoProporción
Utility12,9 mil M US$99,5 %+9,2 % interanual
Corporate And Other58,9 M US$0,5 %−20,4 % interanual
Fuente: SEC EDGAR · Presentado 2026-02-19 · SEC EDGAR
Datos de composición de ingresos: Ingresos por segmento operativo
Ingresos por segmento operativo
Ingresos
Proporción
interanual
Utility
12,9 mil M US$
99,5 %
9,2 %
Corporate And Other
58,9 M US$
0,5 %
-20,4 %
Ingresos y beneficiosCómo la escala del negocio se convierte en beneficio declarado.
Efectivo y deudaLiquidez disponible frente al endeudamiento total.
Generación de efectivoFlujo de caja operativo frente al flujo de caja libre.
RentabilidadEvolución de los márgenes bruto, operativo y neto.
Datos financieros puntuales utilizados en el análisis del 2026-10-02.
Datos del historial financiero
Período
Ingresos
EBITDA
Beneficio neto
Flujo de caja operativo
Flujo de caja libre
Capex
Depreciación y amortización
Compensación basada en acciones
Recompras de acciones
Dividendos pagados
Emisión neta de deuda
Flujo de inversión
Flujo de financiación
Efectivo inicial
Efectivo final
Efectivo e inversiones
Deuda total
Margen operativo
ROIC
WACC
Diferencial ROIC−WACC
2016-12-31
10,8 mil M US$
1407,9 M US$
-583,6 M US$
2998,7 M US$
-1045,6 M US$
4044,3 M US$
2123,3 M US$
38,7 M US$
0 US$
611,8 M US$
—
-3850 M US$
688,2 M US$
—
1187,8 M US$
2246,1 M US$
14,8 mil M US$
-7,5 %
—
—
—
2017-12-31
11,1 mil M US$
3708,8 M US$
411,6 M US$
2623,5 M US$
-1378,1 M US$
4001,6 M US$
2078,6 M US$
37,4 M US$
0 US$
628,9 M US$
—
-3841 M US$
811 M US$
1187,8 M US$
781,3 M US$
1505,9 M US$
15,1 mil M US$
12,3 %
—
3,3 %
—
2018-12-31
11 mil M US$
2573,6 M US$
848,7 M US$
2385,2 M US$
-1886 M US$
4271,2 M US$
2040,6 M US$
38,5 M US$
—
647,7 M US$
—
-4106 M US$
1420,4 M US$
781,3 M US$
481 M US$
905,3 M US$
16,2 mil M US$
4,3 %
—
7,8 %
—
2019-12-31
10,9 mil M US$
4013,2 M US$
1241,2 M US$
2816,6 M US$
-1814,9 M US$
4631,5 M US$
2182,3 M US$
433,7 M US$
—
711,6 M US$
—
-4510,2 M US$
1638,4 M US$
481 M US$
425,7 M US$
817,2 M US$
17,9 mil M US$
12,8 %
—
4,6 %
—
2020-12-31
10,1 mil M US$
4328,6 M US$
1388,3 M US$
2689,9 M US$
2442,7 M US$
247,1 M US$
2257,8 M US$
-214,4 M US$
—
748,3 M US$
—
-4772,3 M US$
3415,8 M US$
425,7 M US$
1759,1 M US$
3389,3 M US$
22,4 mil M US$
17,5 %
—
3,5 %
—
2021-12-31
11,7 mil M US$
4387,7 M US$
1118,5 M US$
2300,7 M US$
2132,4 M US$
168,3 M US$
1990,7 M US$
-719,3 M US$
0 US$
775,1 M US$
—
-6179,3 M US$
2562 M US$
1759,1 M US$
442,6 M US$
713,5 M US$
25,9 mil M US$
15,7 %
—
4,1 %
—
2022-12-31
13,8 mil M US$
4236,3 M US$
1103,2 M US$
2585,5 M US$
-2479,6 M US$
5065,1 M US$
1985,1 M US$
45,4 M US$
—
841,7 M US$
-349,6 M US$
-5709,9 M US$
2906 M US$
442,6 M US$
224,2 M US$
333 M US$
25,9 mil M US$
14,9 %
—
6,7 %
—
2023-12-31
12,1 mil M US$
4922,7 M US$
2356,5 M US$
4294,3 M US$
-146,3 M US$
4440,7 M US$
2051,7 M US$
40,2 M US$
—
918,2 M US$
-551,9 M US$
-4629 M US$
243 M US$
224,2 M US$
132,5 M US$
202 M US$
25,1 mil M US$
21,6 %
—
6,0 %
—
2024-12-31
11,9 mil M US$
5036,6 M US$
1061,2 M US$
4488,5 M US$
-349,8 M US$
4838,3 M US$
2233,2 M US$
—
—
981,7 M US$
2634 M US$
-5849 M US$
2087,7 M US$
132,5 M US$
859,7 M US$
859,7 M US$
28 mil M US$
22,3 %
—
6,3 %
—
2025-12-31
12,9 mil M US$
6145,1 M US$
1773,3 M US$
5150,7 M US$
-2534,3 M US$
7684,9 M US$
2305,6 M US$
—
—
1074,2 M US$
1979,1 M US$
-7109,5 M US$
3028 M US$
859,7 M US$
1928,9 M US$
3811,9 M US$
30,3 mil M US$
24,7 %
—
5,7 %
—
§9 Comparación de valoración con pares
Valor razonableReport-date price
Entergy CorporationETR
Precio / valor razonable
Valor razonable77,58 US$Report-date price100,94 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión48 / 100
American Electric Power Company Inc.AEP
Precio / valor razonable
Valor razonable128,93 US$Report-date price118,35 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión54 / 100
Duke Energy CorporationDUK
Precio / valor razonable
Valor razonable124,95 US$Report-date price113,35 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión53 / 100
Entergy CorporationETR
Precio / valor razonable
Valor razonable77,58 US$Report-date price100,94 US$
Entergy Corporation (ETR) trades at 19.6x forward earnings against a peer median of 16.5x. Its EV/EBITDA of 14.1x compares with a peer median of 12.7x. The comparison uses 4 peers: American Electric Power Company Inc., Duke Energy Corporation, Xcel Energy Inc. and The Southern Company, as of 2026-10-02.
§10 Industria y cicloEN
Fase del ciclo
Expansion
Entergy scaled capex from $4,440,652,000 in FY2023 to $4,838,339,000 in FY2024 and $7,684,922,000 in FY2025, representing a capex-to-depreciation ratio of 3.13x (capex $7,684,922,000 vs D&A $2,305,568,000) that aligns with the broader electric utility benchmark capex-to-depreciation ratio of 3.15x and capex-to-revenue ratio of 33.6%. This high reinvestment pace outstrips operating cash flow of $5,150,651,000, generating -$2,534,271,000 in free cash flow.5,6
Ciclo alcista
An upcycle in the regulated utility industry is characterized by surging power demand driven by data center interconnects, petrochemical electrification, and manufacturing reshoring. Regulators support rapid capital deployment with forward-looking formula rate plans and construction work in progress riders, enabling timely earnings recognition on expanding rate bases while wholesale market stability keeps customer rate impacts manageable.
Ciclo bajista
A downturn in the utility cycle manifests when public utility commissions impose strict prudence disallowances on capital expenditure or reduce authorized return on equity baselines during periods of high interest rates. Prolonged high borrowing costs increase interest expense across holding company debt structures, while retail electricity customer pushback over rising utility bills limits formula rate plan approvals and slows rate-base growth.
Tendencias seculares
Tendencia
Impacto
Nota
Gulf Coast Industrial Electrification and Heavy Manufacturing Expansion
positive
Rapid expansion of liquefied natural gas export infrastructure, petrochemical plant electrification, and data center facilities along the Gulf South corridor is driving commercial and industrial electricity demand, underpinning consensus expectations for utility revenue to reach $15,294,136,640 by FY2027.
Transmission Grid Resilience and Climate Hardening Mandates
positive
Posicionamiento
Entergy is positioned as a pure-play regulated transmission and distribution utility operating in the energy-intensive Gulf Coast industrial corridor. Its exclusive franchises protect its 24.73% operating margin, placing it competitively against peers such as American Electric Power (23.25%) and Xcel Energy (22.70%), though its elevated debt burden and severe hurricane exposure create higher operational and capital risk.3,6
§11 Gestión de posiciónEN
Tamaño de posición
Under a Sell rating with the share price of $100.94 trading at a 30.11% premium to the house Fair value of $77.58, no capital allocation or position weight is warranted. Capital should be preserved and reallocated to opportunities offering an adequate margin of safety.4
Riesgo
Risk management for Entergy focuses on capital preservation given that the market price of $100.94 sits well above intrinsic value ($77.58). Entergy's elevated debt burden of $34,627,321,856 creates substantial interest rate sensitivity in a 5.26% risk-free rate environment. Furthermore, extreme geographic concentration along the Gulf Coast (99.55% utility revenue) exposes the company to seasonal hurricane restoration calls that would widen negative free cash flow (-$2,534,271,000 in FY2025). Portfolio risk should be managed by divesting holdings and avoiding new capital commitments until market price aligns with fundamental valuation.
Tramos de entrada
Nivel
Acción
Por qué
$77.58 or below
Evaluate initial re-entry watchlist condition only; no purchase execution
Fair value midpoint of $77.58 where intrinsic valuation reaches balance, though an additional margin of safety is required before capital deployment.
Consider re-initiating long position on confirmed regulatory stability
Tramos de salida
Nivel
Acción
$100.94 (October 2, 2026 share price)
Liquidate 50-70% of existing holding to harvest premium above Fair value
$105.00 - $110.00
Complete full exit of remaining position into secondary market strength
Trading at a 30.11% premium to Fair value of $77.58 with an implied return of -23.14%, Entergy offers negative risk-adjusted upside. Capital expenditure intensity ($7,684,922,000 in FY2025) and negative free cash flow (-$2,534,271,000) create severe balance-sheet leverage that limits capital appreciation.4,5,6
Dividend / Income Investor
Avoid
Although Entergy pays a steady dividend with a 64.45% payout ratio, dividend funding is entirely reliant on external debt and equity financing because FY2025 free cash flow was -$2,534,271,000. With risk-free Treasury yields at 5.26%, the dividend yield does not compensate for capital downside risk.2,5
Defensive / Regulated Utility Investor
Avoid
Entergy's regulated monopoly status protects its 24.73% operating margin, but holding $34,627,321,856 in debt along the hurricane-prone Gulf Coast creates asymmetric operational and financial risk relative to peers trading at more attractive multiples.4,6
§14 Recomendación finalEN
Acción
Vender
We recommend selling or reducing positions in Entergy Corporation at the report-date price of $100.94. The stock trades at an implied return of -23.14% relative to our Fair value of $77.58, and sits 7.27% above our optimistic Potential value of $94.10. Market pricing of 19.57x forward earnings reflects an unwarranted premium over the regulated peer median of 16.46x (AEP 17.44x, DUK 15.91x, SO 17.01x, XEL 15.73x), leaving no margin of safety for capital execution risks.4
Entergy's aggressive grid transformation build deployed $7,684,922,000 in FY2025 capital expenditures, producing deep negative free cash flow of -$2,534,271,000 and expanding total debt to $34,627,321,856. In an interest rate environment with the 10-year Treasury yield at 5.26%, the combination of debt refinancing costs, potential regulatory lag in rate-base inclusion, and ongoing equity dilution makes current trading multiples untenable. Investors should reallocate capital toward utility peers offering more favorable valuations, positive free cash flow coverage, and lower debt burdens.
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Sources
The records this analysis drew on, as they stood when it was run.
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Valuation multiple de-rating from 19.57x forward P/E to below peer median as transformation build execution lags and regulatory commission pushback mounts.
Entergy currently trades at a forward P/E of 19.57x, a substantial premium over the peer median of 16.46x (AEP 17.44x, DUK 15.91x, SO 17.01x, XEL 15.73x). A 20% reduction in the terminal multiple to 13.2x reflects regulatory prudence disallowances and adverse ROE determinations.3,4
FV impact
-7.8%
Terminal multiple 20% lower
Trigger
Within 24 months
Industrial load growth slowdown and severe weather volume disruption along the Gulf Coast.
Consensus expects FY2026 revenue of $13,966,734,360 (7.88% growth) and FY2027 revenue of $15,294,136,640 (9.50% growth). A 10 pp reduction in 5-year revenue and EPS growth lowers forward earnings fair value by 8.8% under delayed customer interconnections and industrial load deferrals.1
FV impact
-3.4%
Revenue and EPS growth 10 points lower for five years
Severe regulatory disallowance, lag in formula rate adjustments, or adverse rate-case design cuts operating profitability below peer norms, destroying authorized equity compounding.
Refinancing spreads widen across Entergy's $34,627,321,856 total debt portfolio, increasing interest expense by over $150M-$250M annually and compressing net margins below 13.70%.
Catastrophic Gulf Coast tropical storms and hurricanes causing extensive transmission destruction and unbudgeted emergency repair spending that widens negative free cash flow (-$2,534,271,000 in FY2025).
high
Seasonal / 12-36 months
Transmission hardening investments under the transformation buildout, storm escrow reserves, and state legislative securitization frameworks to finance post-storm restoration via customer bill riders.
Elevated debt refinancing costs across Entergy's $34,627,321,856 debt portfolio in a persistent 5.26% risk-free rate environment.
medium
12-24 months
Staggered maturity schedules across regulated operating subsidiaries, commission-approved capital structures, and pass-through of cost of debt via regular rate updates.
Under the Bull scenario, assigned a probability of 15.0%, the shares reach $94.10, representing Potential value $94.10 and generating a return of -6.8% from $100.94. This path requires industrial electricity demand along the Gulf Coast to outpace expectations, driven by large-scale data center interconnections and petrochemical facility electrification. Supportive state utility commissions grant prompt capital recovery riders on transformation spending, lifting operating margins toward top peer levels. Free cash flow generation turns positive faster as the transformation build normalizes toward ongoing depreciation. Disconfirmation would occur if large industrial customers defer capital commitments or if regulators reduce allowed return on equity.
ActualDemonstrating stability consistent with peer regulated electric utility averages across recent reporting periods.
Por qué importa
Indicates whether state formula rate plans and fuel adjustment riders are adequately shielding operating profit from inflationary pressures and maintenance costs.
Entergy's capital allocation is dominated by its transformation buildout, with $7,684,922,000 deployed in FY2025 capital expenditures (scaling from $4,440,652,000 in FY2023 and $4,838,339,000 in FY2024). This investment absorbs 59.36% of consolidated revenue and outstrips operating cash flow of $5,150,651,000, resulting in -$2,534,271,000 of free cash flow. The funding deficit is bridged through debt issuance, lifting total debt to $34,627,321,856, and common equity issuances that expanded diluted shares outstanding to 450,151,884. Entergy maintains its mature utility identity by distributing $2.56 per share in annualized dividends (64.45% payout ratio), balancing capital returns to shareholders with extensive rate base expansion.
Entergy requires sustained external capital market access, increasing total debt to $34,627,321,856 and heightening vulnerability to high debt financing costs.
Utility operations generated $12,887,921,000 in FY2025 revenue (99.55% of consolidated $12,946,686,000,), supporting $3,202,278,000 in operating income (24.73% margin).
Approved utility investments predictably convert capital deployment into per-share earnings growth under formula rate plan mechanisms.
Xcel Energy Inc.XEL
Precio / valor razonable
Valor razonable85,03 US$Report-date price79,73 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión52 / 100
The Southern CompanySO
Precio / valor razonable
Valor razonable74,53 US$Report-date price82,88 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión52 / 100
Margen
ETR
Entergy Corporation
$48.2B
19.6x
3.6x
14.1x
10.2%
—
AEP
American Electric Power Company Inc.
$65.1B
17.4x
2.9x
13.2x
10.1%
23.3%
DUK
Duke Energy Corporation
$89.0B
15.9x
2.7x
11.0x
9.9%
27.5%
XEL
Xcel Energy Inc.
$44.6B
15.7x
3.1x
13.7x
9.9%
22.7%
SO
The Southern Company
$96.3B
17.0x
3.2x
12.1x
11.5%
29.6%
Increasing frequency and intensity of Atlantic tropical weather systems require sustained grid resilience and transmission hardening investments, driving multi-year capital deployment ($7,684,922,000 in FY2025) into regulated asset bases under state-approved resilience riders.
Higher-for-Longer Interest Rate Regime and Refinancing Drag
negative
High benchmark interest rates (5.26% 10-year Treasury risk-free rate) increase the cost of debt financing and refinancing across capital-intensive electric utilities carrying substantial leverage, raising annual carrying costs across Entergy's $34,627,321,856 debt structure.
Confirm thesis impairment regarding regulatory franchise margin protection and reduce fundamental earnings projections.
