Entergy
ETR
$109.58
+0.50%
Entergy Corporation is a holding company operating five regulated, vertically integrated electric utilities that generate and distribute power to approximately 3 million customers across Arkansas, Louisiana, Mississippi, and Texas. As a major power producer with significant rate-regulated generation capacity, the company holds a distinct position as a stable, regulated operator in the U.S. utility sector. The current investor narrative is heavily focused on its landmark $2 billion savings and grid expansion partnership with Meta, announced in March 2026, which is seen as a catalyst for long-term growth, customer savings, and strategic positioning for increased industrial demand, though this has also contributed to a premium valuation that is under debate.…
ETR
Entergy
$109.58
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Investment Opinion: Should I buy ETR Today?
Rating & Thesis: We recommend a Hold rating. Entergy is a high-quality utility with a compelling growth narrative, but its premium valuation and financial strain warrant caution until the Meta partnership's benefits are more fully realized in earnings. This aligns with the analyst consensus which is bullish but does not imply significant near-term upside from current levels.
Supporting Evidence: The stock trades at a forward PE of 21.70x, a premium to the utility sector, justified by its 7.9% YoY revenue growth and the strategic Meta deal. However, profitability is volatile (TTM net margin 13.70%), and the balance sheet is leveraged (Debt/Equity 1.80). Most critically, the negative free cash flow of -$2.75 billion underscores a dependency on capital markets that could pressure the stock if financing conditions tighten.
Risks & Conditions: The two biggest risks are execution risk on the Meta partnership's regulatory approval and the sustainability of its valuation premium. This Hold would upgrade to a Buy if the forward PE compresses below 19x (aligning closer to sector averages) on market weakness, or if the company demonstrates a clear path to positive free cash flow. It would downgrade to Sell if revenue growth decelerates below 5% or if debt-to-equity rises above 2.0. The stock is currently fairly valued to slightly overvalued relative to its history and peers, pricing in future success.
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ETR 12-Month Price Forecast
The outlook is balanced with a tilt towards the base case. Entergy's strategic positioning is superior, but the stock has largely priced in this optimism, leaving limited near-term upside without flawless execution. The key will be translating the Meta narrative into tangible earnings and cash flow growth. We would upgrade to a bullish stance on a successful breakout above $118.45 with strong volume, or on a demonstration of sustained margin expansion. A downgrade to bearish would be triggered by a breakdown below $105 on rising rate fears or a material regulatory setback.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Entergy's 12-month outlook, with a consensus price target around $142.45 and implied upside of +30.0% versus the current price.
Average Target
$142.45
15 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
15
covering this stock
Price Range
$88 - $142
Analyst target range
The stock is covered by 15 analysts, indicating strong institutional interest. The consensus sentiment is bullish, with recent institutional ratings from firms like Wells Fargo, Barclays, and JP Morgan all maintaining 'Overweight' or 'Buy' equivalents. The average target price is not explicitly provided in the data, but the high level of coverage and consistent positive ratings imply a favorable outlook. The implied upside or downside cannot be calculated without the specific consensus target price, but the pattern of reiterated bullish calls suggests analysts see fundamental strength supporting the current valuation. The target price range is also not specified in the provided data. However, the recent news of the $2 billion Meta deal likely underpins the high-end of analyst targets, assuming successful execution, regulatory approval, and subsequent rate base growth. The low-end targets would factor in risks such as regulatory pushback, execution delays, or a higher cost of capital. The institutional ratings data shows a pattern of reiterated positive ratings without recent downgrades, signaling sustained analyst conviction. The absence of a wide dispersion in recent actions (all are reaffirmations) suggests a relatively high degree of consensus and conviction in the near-term outlook, reducing the signal of high uncertainty.
Bulls vs Bears: ETR Investment Factors
The evidence presents a balanced but cautiously optimistic picture. The bull case is anchored by a transformative growth catalyst (the Meta deal) and strong long-term price momentum, while the bear case highlights a stretched valuation and concerning financial metrics like negative free cash flow. Currently, the bull side has stronger evidence due to the strategic, long-term nature of the Meta partnership and unanimous analyst support. However, the single most important tension in the investment debate is whether the company's aggressive growth investments and premium valuation can be sustained by future regulatory approvals and earnings growth, or if financial strain and valuation compression will trigger a re-rating.
Bullish
- Landmark Meta Partnership Drives Growth: The $2 billion savings and grid expansion deal with Meta, announced in March 2026, is a significant catalyst for long-term rate base growth and customer savings. This strategic partnership positions Entergy to capitalize on rising industrial power demand, justifying a growth premium for a typically stable utility.
- Strong Outperformance and Uptrend: The stock has gained 33.26% over the past year, outperforming the S&P 500's 25.19% return, indicating strong investor confidence. It trades at 76% of its 52-week range ($80.11 to $118.45), reflecting sustained momentum and proximity to new highs.
- Analyst Consensus Remains Bullish: Coverage from 15 analysts shows sustained bullish sentiment, with recent institutional ratings from Wells Fargo, Barclays, and JP Morgan all maintaining 'Overweight' or 'Buy' equivalents. This high level of consensus suggests strong fundamental conviction.
- Stable, Diversified Revenue Base: Revenue grew 7.9% YoY in Q4 2025, with a stable mix across Residential ($1.04B), Commercial ($734M), and Industrial ($868M) segments. This diversification provides resilience across economic cycles, supporting predictable cash flows.
Bearish
- Premium Valuation Limits Upside: The trailing PE of 23.04x and forward PE of 21.70x trade at a premium to the typical utility sector average (high-teens). This elevated multiple leaves little room for expansion and increases sensitivity to earnings disappointments or rising rates.
- Negative Free Cash Flow and High Leverage: The company has a significant TTM free cash flow burn of -$2.75 billion due to heavy capex, forcing reliance on external financing. Its debt-to-equity ratio of 1.80 and current ratio of 0.73 indicate elevated leverage and potential liquidity strain.
- Recent Momentum Deceleration: The stock is down 5.15% over the past month, underperforming the S&P 500's +5.6% gain, and shows a relative strength of -10.75 points. This suggests near-term exhaustion after a strong run and potential for consolidation or pullback.
- Earnings and Margin Volatility: Profitability is inconsistent, with Q4 2025 net margin at 8.13% versus 18.32% in Q3 2025, highlighting sensitivity to fuel costs and regulatory lag. This volatility complicates earnings forecasts and valuation.
ETR Technical Analysis
The stock is in a sustained uptrend, evidenced by a 1-year price change of +33.26%, significantly outperforming the S&P 500's +25.19% gain. With a current price of $109.03, it is trading at approximately 76% of its 52-week range ($80.11 to $118.45), indicating it is closer to recent highs than lows, which suggests strong momentum but also potential for near-term consolidation or pullback. Recent momentum, however, shows signs of deceleration and divergence from the longer-term trend; the stock is down -5.15% over the past month, underperforming the S&P 500's +5.6% gain, and is up only +3.77% over the past three months versus the market's +8.42%. This 1-month pullback could represent a healthy consolidation after a strong run or a shift in sentiment as the stock approaches its 52-week high resistance. Key technical levels are clearly defined, with immediate support at the 52-week low of $80.11 and major resistance at the 52-week high of $118.45. A decisive breakout above $118.45 would signal a continuation of the primary bull trend, while a breakdown below the recent low near $109 could see a test of deeper support levels. The stock's beta of 0.529 indicates it is approximately 47% less volatile than the broader market, which is typical for a regulated utility and suggests lower risk for position sizing but also less explosive upside potential during market rallies. The stock's relative strength metrics confirm this defensive, low-beta characteristic, with a 1-month relative strength of -10.75 points versus the S&P 500, highlighting its recent underperformance. The 52-week high of $118.45, set in early April 2026, represents a significant psychological and technical barrier; a failure to breach this level could lead to a prolonged period of range-bound trading between $109 and $118.
Beta
0.53
0.53x market volatility
Max Drawdown
-7.5%
Largest decline past year
52-Week Range
$80-$118
Price range past year
Annual Return
+31.8%
Cumulative gain past year
| Period | ETR Return | S&P 500 |
|---|---|---|
| 1m | -5.1% | +4.0% |
| 3m | +4.9% | +8.2% |
| 6m | +16.5% | +11.5% |
| 1y | +31.8% | +24.3% |
| ytd | +16.7% | +8.3% |
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ETR Fundamental Analysis
Revenue growth is modest but positive, with the most recent quarterly revenue of $2.96 billion representing a 7.9% year-over-year increase. Segment data shows a diversified customer base, with Residential ($1.04B), Commercial ($734M), and Industrial ($868M) as the primary revenue drivers, indicating stability across economic cycles. The multi-quarter trend shows revenue fluctuating seasonally but maintaining a generally stable trajectory, which is typical for a regulated utility and supports a predictable, low-growth investment case focused on income and capital investment returns. The company is profitable, reporting net income of $240.5 million for Q4 2025, translating to a net margin of 8.13%. Gross margin for the quarter was 22.53%, while the operating margin stood at 16.25%. Profitability has shown variability across quarters, with Q3 2025 demonstrating stronger margins (gross margin of 35.16%, net margin of 18.32%), largely influenced by seasonal factors and fuel costs. The trailing twelve-month net margin is 13.70%, which is reasonable for a regulated utility, though margin compression in Q4 highlights the impact of regulatory lag and cost pressures. The balance sheet carries significant leverage, with a debt-to-equity ratio of 1.80, which is elevated but manageable for a capital-intensive utility with stable cash flows. A point of concern is the negative free cash flow (TTM) of -$2.75 billion, driven by heavy capital expenditures for grid modernization and generation investment. The current ratio of 0.73 indicates potential liquidity strain in covering short-term obligations, though regulated utilities often rely on continuous access to capital markets. Return on Equity (ROE) of 10.34% is adequate, reflecting the regulated return on rate base, but the negative free cash flow underscores the company's dependence on external financing to fund its growth and dividend commitments.
Quarterly Revenue
$3.0B
2025-12
Revenue YoY Growth
+0.07%
YoY Comparison
Gross Margin
+0.22%
Latest Quarter
Free Cash Flow
$-2.7B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ETR Overvalued?
Given a positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. The trailing PE is 23.04x, while the forward PE is 21.70x, indicating the market expects modest earnings growth. The slight discount of the forward multiple suggests expectations are for steady, but not accelerating, bottom-line expansion, consistent with a regulated utility model. Compared to broader market multiples, Entergy's valuation appears elevated. Its trailing PE of 23.04x and forward PE of 21.70x are at a premium to the typical utility sector average, which often trades in the high-teens. The Price-to-Sales ratio of 3.16x and EV-to-EBITDA of 11.68x further confirm a premium pricing. This premium is likely justified by the company's strategic growth initiatives, like the Meta partnership, which promise future rate base growth and customer savings, potentially leading to superior regulatory outcomes and earnings visibility compared to peers. Historically, the stock's own valuation provides context. The current trailing PE of 23.04x is near the higher end of its recent historical range, as seen in quarterly data where the PE has fluctuated from as low as 5.43x in late 2023 to over 100x during periods of depressed earnings. Trading near the top of its own band suggests the market is currently pricing in optimistic expectations from recent catalysts, leaving less room for multiple expansion and increasing sensitivity to any earnings disappointments or rising interest rates.
PE
23.0x
Latest Quarter
vs. Historical
High-End
5-Year PE Range -3590x~109x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
11.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: Entergy faces significant financial strain from its aggressive capital expenditure program, evidenced by a TTM free cash flow of -$2.75 billion. This necessitates continuous external financing, which is risky in a higher interest rate environment. The company's elevated debt-to-equity ratio of 1.80 and a weak current ratio of 0.73 further compound liquidity risks. Additionally, earnings volatility is a concern, with net margin swinging from 18.32% in Q3 2025 to 8.13% in Q4 2025, indicating sensitivity to fuel costs and regulatory recovery timelines.
Market & Competitive Risks: The primary market risk is valuation compression. Trading at a trailing PE of 23.04x, a premium to sector peers, the stock is vulnerable to multiple contraction if growth expectations from the Meta deal falter or if rising Treasury yields increase the discount rate for utility dividends. The stock's low beta of 0.529 offers downside protection but also means it may underperform during broad market rallies, as seen in its recent 1-month underperformance. Sector rotation out of defensive names into cyclicals could also pressure the stock.
Worst-Case Scenario: The worst-case scenario involves a combination of regulatory pushback on the Meta partnership's rate recovery, a sharp rise in interest rates increasing financing costs, and an earnings miss triggering multiple compression. This could lead to a rapid de-rating towards its 52-week low of $80.11. From the current price of $109.03, this represents a realistic downside of approximately -27%. A more immediate adverse scenario could see a breakdown below recent support, testing the $100 level for a -8% loss.
FAQ
The key risks are, in order of severity: 1) Financial Risk: Heavy reliance on external financing due to negative free cash flow (-$2.75B TTM) and high leverage (Debt/Equity 1.80). 2) Valuation Risk: A premium PE multiple (23.04x) that could compress if growth disappoints or interest rates rise. 3) Execution Risk: Regulatory hurdles or delays in realizing the benefits of the $2 billion Meta partnership. 4) Macro Risk: Sensitivity to rising interest rates, which increase the company's cost of capital and make dividend yields less attractive.
Our 12-month forecast outlines three scenarios. The Base Case (60% probability) sees the stock trading between $109 and $118, as the Meta story unfolds without major hiccups. The Bull Case (25% probability) targets $118 to $125 on flawless execution and multiple expansion. The Bear Case (15% probability) sees a drop to $95-$105 on regulatory setbacks or a rising rate environment. The most likely outcome is range-bound trading, with the key assumption being that earnings meet the $7.22 consensus EPS estimate.
ETR appears fairly valued to slightly overvalued. Its forward PE of 21.70x is at a premium to the typical utility sector average (often in the high-teens), justified by its 7.9% revenue growth and the Meta deal's potential. Historically, its own trailing PE of 23.04x is near the higher end of its recent range. The market is paying a premium for future growth, implying expectations for successful regulatory outcomes and earnings acceleration. If those expectations are not met, the stock is vulnerable to multiple compression.
ETR is a good buy for patient, long-term investors who believe in the successful execution of its Meta partnership and can tolerate its premium valuation and financial leverage. For traders or those seeking deep value, it is less attractive given its recent run-up and proximity to 52-week highs. The stock offers a 2.67% yield and growth potential, but the -27% downside risk to its 52-week low highlights the importance of entry point. A disciplined approach would be to wait for a pullback towards the $105-$110 range.
ETR is primarily suitable for a long-term investment horizon of 3-5 years. This allows time for the Meta partnership's grid investments to be completed, earn regulatory approval, and flow through to earnings and cash flow. Its low beta of 0.529 and dividend make it a stable holding, but the premium valuation and execution risk over the next 12-18 months argue against short-term trading. A minimum holding period of 18-24 months is suggested to adequately capture the investment thesis.
