Will This Ratings Upgrade Help Entergy (ETR) Stock Today?

NEW YORK (TheStreet) -- Entergy Corp. (ETR) was upgraded to "neutral" from "sell" at Citigroup on Monday.

The firm said it raised its rating on the energy company, which is engaged in electric power production and retail distribution operations, based on the favorable court ruling Entergy received regarding its Buchanan, NY-based Indian Point nuclear plant.

Last week, the NY State Supreme Court found that Indian Point 2-3 is "exempt" from the New York State Coastal Management Program certification requirements and is one step close to a new 20-year license renewal, Citigroup said.

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Citigroup said its "sell" rating was based on the uncertainty surrounding the company's most profitable plant, and whether or not it would continue to operate. However, "with this recent order we now believe that the plant will operate into the foreseeable future," Citigroup added.

The firm raised its price target on Entergy to $85 from $72.

Separately, TheStreet Ratings team rates ENTERGY CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate ENTERGY CORP (ETR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, ETR's share price has jumped by 39.52%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ETR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $1,362.93 million or 25.78% when compared to the same quarter last year. In addition, ENTERGY CORP has also modestly surpassed the industry average cash flow growth rate of 19.74%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, ENTERGY CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • ENTERGY CORP's earnings per share declined by 5.2% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ENTERGY CORP reported lower earnings of $3.98 versus $4.75 in the prior year. This year, the market expects an improvement in earnings ($5.95 versus $3.98).
  • You can view the full analysis from the report here: ETR Ratings Report

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