Entergy: Stable Utility Offers 5.8% Upside to Discounted Fair Value
By stockpickr AI | March 1, 2026 | 10 min read
Investment Summary
Entergy Corporation (ETR), a regulated utility in the energy sector, appears slightly undervalued based on a Discounted Cash Flow analysis, supported by stable regulated earnings and consistent dividend payouts.
Investment Recommendation
Buy
Fair Value: $118.50
Current Price: $112.02
Upside/Downside: +5.79%
The DCF model suggests an intrinsic value exceeding the current market price of $112.02, indicating a slight undervaluation. The primary driver for this valuation is the stable, low-risk Free Cash Flow generation inherent in regulated utility businesses.
Key Metrics
- Market Cap: $51.09B
- P/E Ratio: 18.32x
- Forward P/E: 16.84x
- Revenue Growth (YoY): 2.30%
- Net Margin: 8.90%
- ROE: 7.80%
- Debt/Equity: 1.57
- Dividend Yield: 3.55%
Strengths
- Stable, regulated earnings base providing predictable cash flows for dividends.
- Strong focus on grid modernization and emission reduction targets, aligning with industry transition themes.
- Relatively low Beta (0.55), indicating lower volatility compared to the broader market.
- Consistent dividend history (Yield of 3.55%) attractive to income-focused investors.
Risk Factors
- High Debt-to-Equity ratio (1.57), making it vulnerable to rising interest rates.
- Reliance on timely and favorable regulatory outcomes for necessary rate increases to meet ROI targets.
- Exposure to extreme weather events, which can lead to significant repair costs and regulatory scrutiny.