Entergy Corporation

**Comprehensive Analysis of Entergy (ETR)**

Technical Perspective ETR shows strong technical momentum, outperforming the broader market with gains exceeding 5.8% over the past three months while exhibiting lower volatility (beta of 0.65). Trading near its 52-week high with a manageable drawdown of -10.1%, the stock displays a healthy uptrend rather than overbought conditions. This suggests continued positive sentiment and stability for risk-averse investors.

Fundamental Outlook Fundamentals reveal significant weakness, with declining Q4 revenue, a sharp drop in net profit margin to 8.1%, and negative free cash flow. High debt (debt-to-equity of 1.80) and poor liquidity (current ratio of 0.73) indicate financial strain, while low asset turnover and ROE of 1.4% reflect operational inefficiencies. These metrics highlight underlying challenges in profitability and financial health.

Valuation & Risk Assessment Valuation appears stretched, with a forward P/E of 43.4 and a negative PEG ratio (-0.65) signaling poor earnings growth relative to price. However, risks are moderated by ETR’s low volatility and utility-sector stability, though regulatory and operational headwinds persist. The stock’s premium pricing may not be justified by its current fundamentals.

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**Investment Recommendation**

ETR is not a buy at current levels. While its technical strength and low volatility are appealing, overvaluation and weak fundamentals—including profit margin compression, high debt, and negative free cash flow—pose substantial risks. Investors should await improved earnings stability or a more attractive entry point before considering a position.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the provided analysis, here is a 12-month outlook for Entergy (ETR):

12-Month Outlook for ETR

Over the next 12 months, ETR's performance will likely hinge on its ability to navigate key catalysts such as successful regulatory rate cases to improve cash flow and any strategic initiatives to address its high debt load and operational inefficiencies. The primary potential risks are substantial, centered on its stretched valuation, weak profitability, and financial strain from negative free cash flow and high leverage, which could limit upside and lead to volatility if earnings disappoint. Given the significant divergence between its positive technical momentum and weak fundamentals, alongside the absence of a clear analyst target, a cautious target price range is anticipated, likely hovering near the current level with a potential bias to the downside if fundamental issues persist, suggesting a range of approximately $90 to $110.

Wall Street Consensus

Most Wall Street analysts are optimistic about Entergy Corporation's 12-month outlook, with consensus target around $103.33, indicating expected upside potential.

Overall, ETR has investment potential but also faces challenges. Here are key factors to weigh before investing.

ETR has demonstrated strong positive momentum with significant outperformance relative to the broader market. The stock shows consistent gains across both short and intermediate timeframes while maintaining lower volatility characteristics.

Over the past one and three months, ETR has posted gains exceeding 5.8%, notably outperforming the market by 5.67% during the three-month period. This consistent upward trajectory, combined with a beta of just 0.654, indicates the stock has delivered superior returns with below-market volatility.

Currently trading at $102.23, ETR sits just 4.2% below its 52-week high of $106.71 and substantially above its low of $75.57. Given its proximity to the yearly peak and modest maximum drawdown of -10.1%, the stock appears to be in a strong uptrend rather than exhibiting overbought conditions.

Revenue & Profitability: ETR demonstrates volatility in quarterly performance, with Q4 revenue declining to $2.96 billion from Q3's $3.81 billion. Profitability metrics weakened significantly, with net profit margin contracting from 18.3% to 8.1% quarter-over-quarter, indicating substantial margin pressure despite maintaining positive earnings.

Financial Health: The company's financial position shows strain with a current ratio of 0.73 and weak liquidity metrics, compounded by a high debt-to-equity ratio of 1.80. The interest coverage ratio of 0.84 suggests insufficient operating income to cover interest obligations, while negative free cash flow per share of -$2.21 raises concerns about cash generation capacity.

Operational Efficiency: ETR exhibits low operational efficiency with an asset turnover of just 0.04 and modest ROE of 1.4%, indicating poor utilization of assets and equity. The operating cycle of 118 days highlights extended working capital requirements, though the positive cash conversion cycle of 17 days suggests relatively efficient management of payables versus receivables and inventory.

Based on the valuation metrics alone, ETR appears significantly overvalued. The forward PE ratio soaring to 43.40 is strikingly high, while the TTM PE of 25.96 also sits at the upper end of defensive valuations. Even more concerning is the PEG ratio of -0.65, which signals either declining earnings growth or market skepticism about forward projections. The Enterprise Value to EBITDA multiple exceeding 65 is exceptionally elevated for a utility entity, suggesting current earnings are inadequate to support the inflated forward valuation.

The negative PEG ratio (-0.65) indicates a troubling disconnect between price appreciation and earnings growth. Negative PEG ratios are generally considered red flags for utilities, as they typically signal either structural earnings pressure or unrealistic forward growth expectations. The combination of a premium forward PE with a negative PEG ratio warrants caution, particularly given the substantial premium over the current TTM valuation.

Volatility Risk: Entergy's beta of 0.654 indicates the stock is significantly less volatile than the broader market, which is characteristic of a regulated utility. Its modest 1-year maximum drawdown of -10.1% further confirms a lower-risk volatility profile relative to the market average.

Other Risks: The absence of meaningful short interest suggests minimal speculative pressure or near-term downside risk from that specific factor. As a utility, its primary risks are more likely tied to regulatory decisions and weather-related impacts on operations.