Entergy’s Earnings Foundation Keeps Climbing Higher
Despite ongoing increases in its share price, I maintain my Buy recommendation for Entergy Corporation. This stance is supported by robust earnings expansion, prudent forward-looking guidance, and a solidly structured capital investment strategy.
The latest 2025 results from Entergy, traded under the ticker ETR on the NYSE, underscore consistent sales expansion, stable financial credit indicators, and minimal shareholder dilution effects.
Looking ahead, the company’s guidance for 2028 projects an impressive compound annual growth rate of 11% for earnings per share. This optimistic outlook is grounded in executed contracts and growing demand from pipeline projects, which could unlock even greater growth opportunities.
With a forward earnings multiple of 24 times, Entergy’s valuation appears reasonable given its strong growth trajectory. Investors can anticipate compelling total returns, and my price target for the stock in 2027 sits between $115 and $117.
In September of last year, I conducted a detailed review of Entergy Corporation following regulatory approval for Meta Platforms, Inc.’s ambitious 5GW data center initiative in Louisiana. Since that time, Entergy has made significant strides in developing the necessary infrastructure to support this major project.
Entergy operates as a prominent utility provider, primarily serving the southeastern United States with a focus on electricity generation, transmission, and distribution. The company’s strategic positioning in regions experiencing rapid economic and industrial growth, particularly in data centers and manufacturing, positions it favorably for sustained performance.
The recent earnings release not only validated expectations but exceeded them in key areas. Revenue growth was driven by higher electricity demand from both residential and commercial sectors, bolstered by favorable weather patterns and new customer additions.
Credit metrics remain steady, with healthy interest coverage ratios and manageable debt levels relative to regulated asset bases. This financial discipline ensures resilience against economic fluctuations and supports ongoing investments in grid modernization and renewable energy integration.
Management’s long-term guidance through 2028 highlights disciplined execution of the capital plan, with investments targeted at high-return projects. Signed contracts for pipeline-related demand provide a clear visibility into future revenue streams, mitigating regulatory and market risks.
The 11% EPS CAGR implied in the guidance reflects confidence in operational efficiencies, cost controls, and rate case outcomes. Upside potential exists from accelerated data center load growth and potential federal incentives for clean energy transitions.
At its current valuation, Entergy trades at a premium to peers, but this is warranted by superior growth prospects and a shareholder-friendly capital allocation policy, including consistent dividend increases and share repurchases.
Total return potential remains attractive, combining dividend yields above the industry average with meaningful capital appreciation. My 2027 price target of $115-$117 assumes continued execution on guidance and moderate multiple expansion, offering approximately 20-25% upside from recent levels.
Investors seeking exposure to the utility sector with defensive qualities and growth catalysts should consider Entergy a core holding. The earnings base’s upward momentum, combined with strategic initiatives, reinforces its investment appeal.
