Company of the Week: Entergy Corporation

Oct.29.09 | About: Entergy Corporation (ETR)

On Tuesdays we often do a detailed analysis of one of the companies in our valuation database. This week’s featured company is Entergy Corporation (NYSE:ETR).

Company Profile (obtained from Google Finance):

Entergy Corporation (Entergy) is an integrated energy company engaged primarily in electric power production and retail electric distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity and Entergy is a nuclear power generator in the United States. Entergy delivers electricity to 2.7 million utility customers in Arkansas, Louisiana, Mississippi and Texas. The Company operates through two business segments: Utility and Non-Utility Nuclear. Entergy also operates the non-nuclear wholesale assets business. The non-nuclear wholesale assets business sells to wholesale customers the electric power produced by power plants that it owns. In March 2008, Entergy Gulf States Louisiana, L.L.C. acquired the Calcasieu Generating Facility. In September 2008, Entergy Arkansas Inc. acquired the Ouachita Plant.

Business and Management Review

1) Is the business simple and understandable?

Entergy Corp is a utility, one of the most basic businesses in the market. Value investors and dividend investors generally love utilities because of their consistency, easy business model, and good dividends. On the business side, the company focuses on energy production and distribution. Entergy is the second largest nuclear generator in the United States.

2) Does the business have a consistent operating history?

Entergy began in 1913 when Harvey Couch purchased some sawdust from a local sawmill to use as fuel for an electricity company he was starting. The company grew quickly and consolidated with others over time. Overall, the company has remained true to its core operating plan – the production and distribution of electricity. Financially, the company has a very strong consistency history with over ten years of positive net income, dividend payments, and growth in net income over the period.

3) Does the company have favorable long term prospects?

Who can live without electricity? I certainly can’t. Therefore, electric power production in some manner will be around for a very, very long time. I believe Entergy is uniquely suited to be strong in the future as I believe nuclear power is a strong source of efficient fuel. The company is actively pursuing growth in its nuclear division which bodes very well for long-term prospects.

4) Is management rational?

The management has remained focused on energy production and appears to have a strong idea that the path of the industry is towards fuels other than coal and oil. The management is actively pursuing opportunities that reflect their idea of the future of the industry, and that is a rational approach to management.

5) Is management candid with its shareholders?

The company has a well designed and thorough website. It appears that management is candid with its shareholders and there is no evidence to the contrary.

Data of Interest

Explore more ETR Data on Wikinvest
Explore more ETR Data on Wikinvest
Explore more ETR Data on Wikinvest
Explore more ETR Data on Wikinvest

Our Valuation: You can view our quantitative valuation following Benjamin Graham’s formula and guidelines from The Intelligent Investor on this page: Entergy Corporation (ETR) Valuation

FULL Disclosure: At the time of publication, the author did not hold a position in ETR.