Entergy CorporationETR

Morningstar Rating

Stock Research and Analysis

by Travis Miller

Entergy's six merchant nuclear power plants in prime areas of the Northeast and Midwest are the crown jewels of this diversified utility. However, a planned spin-off of these plants in the first quarter of 2010 could give investors a choice: the leftovers--primarily Read more

Bulls Say

Despite the hurricanes that regularly hit Entergy's Gulf Coast companies, that area constitutes only a small portion of Entergy's total service territory.

The same storms that hit Entergy's Gulf Coast utilities also tend to send natural gas prices higher, lifting power prices in the Northeast and boosting profits for Entergy's merchant nuclear assets.

Sensitivity to natural gas prices and possible restrictions on carbon dioxide emissions make the economics of nuclear power increasingly appealing.

Entergy's nuclear fleet is among the cream of the merchant-generation crop. Investors who are bullish on power prices should give Entergy ample consideration.

The potential for brownfield expansions at its large power plant footprint could strengthen Entergy's already-formidable position in U.S. merchant generation. Read more

Bears Say

Restrictive capital markets and slow-moving regulatory approvals have delayed plans to spin the nuclear business into a separate company.

Like other utilities, Entergy is experiencing higher pension and medical costs, which will continue to pressure margins without regulatory consideration.

Re-regulating merchant plants in its service territory could benefit rate payers, not shareholders, and could slow Entergy's long-term regulated earnings growth. Read more

Strategy

The announcement in late 2007 that Entergy would spin off its nonutility nuclear operations marks another step in management's quest to lower the company's risk. If the spin-off goes through, the remaining Read more

Management

J. Wayne Leonard, who became CEO in 1999, has been in the utilities business for most of his professional career. The senior management team has done a good job of fixing Entergy's problems: improving its once-woeful customer service, selling its struggling Read more

Profile

Entergy is an integrated energy company with three primary businesses. Its regulated utility distributes power to 2.6 million customers and gas to 240,000 customers across Read more

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