Entergy
ETR
$107.34
-0.57%
Entergy Corporation is a holding company that owns and operates five regulated, vertically integrated electric utilities serving approximately 3 million customers across Arkansas, Louisiana, Mississippi, and Texas, with a generation fleet of 27 gigawatts, including a significant nuclear presence. As one of the largest power producers in the U.S., Entergy is a dominant player in the Gulf South region, distinguished by its regulated utility model and its strategic focus on industrial and commercial load growth. The current investor narrative centers on the company's landmark $2 billion savings plan with Meta, which is expected to fund a major grid expansion and drive long-term growth, while also raising questions about the sustainability of its premium valuation and the execution risks associated with large-scale infrastructure projects.…
ETR
Entergy
$107.34
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Investment Opinion: Should I buy ETR Today?
Based on the analysis, Entergy is rated a Buy with a thesis that its strategic investments in grid infrastructure, catalyzed by the Meta deal, will drive above-average earnings growth for a utility, justifying its premium valuation. The consensus recommendation is 'buy' with an average target price of $123.55, implying a 14.6% upside from the current price of $107.84. Supporting evidence includes a PEG ratio of 0.38, which indicates the stock is undervalued relative to its growth rate, and a forward PE of 21.15x, which is reasonable given the expected earnings growth of ~9%. Revenue growth of 11.97% YoY in Q1 2026 and a net margin of 12.26% further support the thesis. However, the high debt-to-equity ratio of 1.80 and negative free cash flow of -$3.0 billion are key risks that could invalidate the Buy rating if they lead to financial distress or margin compression. The rating would be downgraded to Hold if the stock trades above $123 (analyst average target) without corresponding earnings upgrades, or if revenue growth decelerates below 5%. Conversely, an upgrade to Strong Buy would be warranted if the Meta deal leads to faster-than-expected rate base growth and the PE compresses below 20x. Overall, ETR appears fairly valued to slightly undervalued relative to its growth prospects, but investors should monitor execution and leverage closely.
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ETR 12-Month Price Forecast
The AI assessment leans bullish on Entergy, driven by its strong revenue growth, attractive PEG ratio, and positive analyst sentiment. The company's strategic position in a high-demand region and the Meta deal provide a clear growth catalyst that is not fully reflected in the current valuation. However, the high debt levels and negative free cash flow temper confidence, as these could become problematic if interest rates rise or execution falters. The stance would be upgraded to high confidence if the company demonstrates improved cash flow generation and successful project execution, while a downgrade to neutral would occur if revenue growth decelerates below 5% or if the stock price exceeds the analyst average target without corresponding earnings upgrades.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Entergy's 12-month outlook, with a consensus price target around $123.53 and implied upside of +15.1% versus the current price.
Average Target
$123.53
0 analysts
Implied Upside
+15.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$91 - $139
Analyst target range
Entergy is covered by 21 analysts, with a consensus recommendation of 'buy' and a mean recommendation score of 1.71 (where 1 is strong buy and 5 is sell). The average price target is $123.55, which implies an upside of approximately 14.6% from the current price of $107.84. The distribution of ratings is not provided, but the 'buy' consensus and the fact that 10 recent ratings from major firms like Evercore ISI, Mizuho, Barclays, and JP Morgan are either 'Outperform' or 'Overweight' indicate a bullish sentiment. The target price range is from a low of $91.00 to a high of $139.00, with the high target implying a 28.9% upside, suggesting that some analysts see significant potential from the Meta deal and grid expansion, while the low target implies a 15.6% downside, reflecting concerns about execution and regulatory risks. The wide spread of $48 between the low and high targets indicates a high degree of uncertainty about the company's future performance, which is typical for a utility undergoing major capital investment. Recent rating actions have been mostly positive, with upgrades from Evercore ISI (from In Line to Outperform) and reaffirmations of Overweight/Buy ratings, signaling growing confidence in the company's growth strategy.
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Bulls vs Bears: ETR Investment Factors
Entergy presents a compelling growth story driven by the Meta deal and strong industrial demand, but it comes with a premium valuation and high leverage. The bull case is supported by solid revenue growth, a low PEG ratio, and a consensus 'buy' rating with meaningful upside to analyst targets. However, the bear case highlights the elevated PE relative to peers, negative free cash flow, and recent price underperformance, which could lead to multiple compression if growth disappoints. The most critical tension is whether the company can successfully execute its large-scale infrastructure projects and translate the Meta savings into sustained earnings growth, justifying the premium valuation. Currently, the evidence slightly favors the bulls given the strong growth trajectory and analyst optimism, but the execution risk remains the key swing factor.
Bullish
- Meta Deal Unlocks $2B Savings: Entergy's landmark agreement with Meta is expected to generate $2 billion in customer savings, funding a major grid expansion that positions the company for long-term growth. This strategic partnership underscores strong industrial demand and provides a clear catalyst for future earnings.
- Strong Revenue Growth Momentum: Q1 2026 revenue grew 11.97% year-over-year to $3.19 billion, with consistent quarterly increases from $2.74 billion in Q4 2024 to $3.81 billion in Q3 2025. This growth is driven by robust industrial and commercial load, particularly from large customers like Meta.
- Attractive Valuation with PEG of 0.38: With a trailing PE of 23.22x and a PEG ratio of 0.38, the stock is reasonably priced relative to its growth prospects. The low PEG suggests that the market is not fully pricing in the expected earnings growth, offering upside potential.
- Analyst Consensus: Buy with 14.6% Upside: 21 analysts rate ETR a 'buy' with a mean recommendation score of 1.71, and the average price target of $123.55 implies a 14.6% upside from the current price of $107.84. Recent upgrades from firms like Evercore ISI and Mizuho reflect growing confidence.
Bearish
- Premium Valuation vs. Utility Peers: ETR trades at a trailing PE of 23.22x, above the typical utility sector average of around 20x. This premium may be hard to sustain if growth slows or if the Meta deal faces execution delays, leading to multiple compression.
- High Debt-to-Equity Ratio of 1.80: Entergy's debt-to-equity ratio of 1.80 is elevated, reflecting significant borrowing to fund capital projects. Rising interest rates could increase interest expenses, which were already $379.7 million in Q1 2026, pressuring margins.
- Negative Free Cash Flow: TTM free cash flow is -$3.0 billion, indicating that the company is spending heavily on capital projects, which may strain liquidity. This cash burn could limit financial flexibility and increase reliance on debt or equity issuance.
- Recent Price Weakness and Underperformance: The stock has fallen 5.6% over the past month and underperformed the S&P 500 by 8.45% over the same period. Relative strength is negative across all timeframes, suggesting momentum is currently against the stock.
ETR Technical Analysis
Entergy's stock has been in a clear uptrend over the past year, with a 1-year price change of +19.44%, though it has recently pulled back from its 52-week high of $118.45 to the current price of $107.84, which is approximately 91% of the 52-week range (calculated as (107.84 - 86.40) / (118.45 - 86.40) = 66.7% of the range, but the stock is 8.9% below the high). This positioning suggests the stock is still in the upper half of its range, indicating a constructive long-term trend but with some recent loss of momentum. The 52-week low of $86.40 provides a significant support level, while the high represents a resistance zone that the stock has struggled to break above decisively.
Beta
0.49
0.49x market volatility
Max Drawdown
-11.0%
Largest decline past year
52-Week Range
$86-$118
Price range past year
Annual Return
+19.5%
Cumulative gain past year
| Period | ETR Return | S&P 500 |
|---|---|---|
| 1m | -4.3% | +1.9% |
| 3m | -4.5% | +2.3% |
| 6m | +3.2% | +10.6% |
| 1y | +19.5% | +19.5% |
| ytd | +14.4% | +11.8% |
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ETR Fundamental Analysis
Entergy's revenue trajectory has been solid, with Q1 2026 revenue of $3.19 billion, up 11.97% year-over-year from $2.85 billion in Q1 2025, and the company has consistently grown revenue over the past several quarters, from $2.74 billion in Q4 2024 to $3.81 billion in Q3 2025. The growth is driven by strong industrial and commercial demand, particularly from large customers like Meta, as well as rate base expansion. However, revenue growth has been uneven, with Q4 2025 revenue of $2.96 billion showing a sequential decline from Q3, reflecting seasonality and weather impacts. The company's net income in Q1 2026 was $390.8 million, with a net margin of 12.26%, which is healthy for a regulated utility, though it was down from the 18.32% net margin in Q3 2025 due to higher operating costs and interest expenses. Gross margin in Q1 2026 was 68.66%, a significant improvement from the 22.53% in Q4 2025, indicating better cost management, but operating margin was 17.95%, reflecting the impact of increased depreciation and maintenance expenses.
Quarterly Revenue
$3.2B
2026-03
Revenue YoY Growth
+12.0%
YoY Comparison
Gross Margin
68.7%
Latest Quarter
Free Cash Flow
$-3.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ETR Overvalued?
Given that Entergy is profitable, the primary valuation metric is the price-to-earnings (PE) ratio. The trailing PE is 23.22x, while the forward PE is 21.15x, indicating that the market expects earnings growth of about 9% over the next year. The gap between trailing and forward PE is modest, suggesting that the market's growth expectations are reasonable and not overly optimistic. Compared to the industry average PE of 22x (based on the provided data, though the industry average is not explicitly given, the PE of 23.22x is slightly above the typical utility sector average of around 20x), Entergy trades at a small premium, which is justified by its above-average growth prospects and its strategic position in a high-demand region. Historically, Entergy's PE has ranged from a low of 5.43x in Q4 2023 to a high of 120.16x in Q2 2024, with the current 23.22x sitting near the middle of that range, suggesting that the stock is not at extreme valuation levels but is also not cheap relative to its own history.
PE
23.2x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 5x~54x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
11.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financially, Entergy carries a high debt-to-equity ratio of 1.80, which amplifies vulnerability to rising interest rates; interest expenses were $379.7 million in Q1 2026, up from $329.8 million a year earlier. The company also has negative free cash flow of -$3.0 billion TTM, reflecting heavy capital spending that could strain liquidity if funding costs rise. Net margin, while healthy at 12.26% in Q1 2026, has been volatile, dipping to 8.13% in Q4 2025, indicating sensitivity to operating costs and weather. Revenue concentration in the Gulf South region and dependence on a few large industrial customers like Meta increase financial risk if those customers reduce demand or renegotiate contracts.
FAQ
The key risks for ETR include: 1) Financial risk from high leverage (debt-to-equity of 1.80) and negative free cash flow of -$3.0 billion, which could strain liquidity if interest rates rise. 2) Execution risk on the $2 billion Meta savings plan and grid expansion, which could face delays, cost overruns, or regulatory hurdles. 3) Market risk from a premium valuation (PE of 23.22x) that could compress if growth disappoints, leading to a potential 15.6% downside to the analyst low target of $91. 4) Regulatory risk in its four-state operating area, where rate case outcomes could impact earnings. The most severe risk is a combination of execution failures and rising interest rates, which could significantly pressure the stock.
The 12-month forecast for ETR is moderately bullish, with a base case probability of 50% targeting a price range of $115-$125, aligning with the analyst average target of $123.55. The bull case, with a 25% probability, targets $123.55-$139, driven by successful execution of the Meta deal and faster-than-expected growth. The bear case, also with a 25% probability, targets $91-$100, reflecting execution failures or regulatory setbacks. The most likely scenario is the base case, assuming steady growth and stable interest rates. Investors should monitor quarterly earnings and regulatory developments to adjust expectations.
ETR trades at a trailing PE of 23.22x, which is slightly above the typical utility sector average of around 20x, indicating a modest premium. However, the forward PE of 21.15x and PEG ratio of 0.38 suggest that the market is pricing in reasonable growth expectations, making the stock appear fairly valued to slightly undervalued. The premium is justified by the company's above-average revenue growth of 11.97% YoY and its strategic position in a high-demand region. Historically, the PE has ranged from 5.43x to 120.16x, and the current level is near the middle, suggesting it is not at extreme levels. Overall, the valuation implies the market expects continued growth, and if the company delivers, the stock could re-rate higher.
ETR appears to be a good buy for investors with a medium-to-long-term horizon, given the 14.6% upside to the average analyst target of $123.55 and a PEG ratio of 0.38, which suggests the stock is undervalued relative to its growth. The company's revenue growth of 11.97% YoY and the strategic Meta deal provide a strong growth narrative. However, the high debt-to-equity ratio of 1.80 and negative free cash flow of -$3.0 billion are significant risks that could lead to downside if interest rates rise or execution falters. For risk-averse investors, the stock may be less suitable due to these leverage concerns, but for those comfortable with moderate risk, it offers an attractive risk/reward balance.
ETR is better suited for long-term investment, given its regulated utility model, low beta of 0.486, and dividend yield of 2.67%, which provide stability and income. The growth catalysts, such as the Meta deal and grid expansion, are multi-year projects that will unfold over time, making a holding period of at least 3-5 years appropriate to capture the full value. Short-term trading is possible given the stock's volatility, but the recent 5.6% monthly decline and negative relative strength suggest near-term weakness. For long-term investors, the stock offers a compelling combination of growth and income, but they should be prepared for potential volatility from execution risks and interest rate changes.