Entergy Corp (ETR) Valuation

Flash Player 9 or higher is required to view the chart Click here to download Flash Player now

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.

ModernGraham Comments: None at this time.

Defensive and Enterprising Investor Tests:

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
6. Moderate PEmg ratio – PEmg is less than 20 – PASS
7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests: Score = 3/5

1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
3. Earnings Stability – positive earnings per share for at least 5 years – PASS
4. Dividend Record – currently pays a dividend – PASS
5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary:

• Last Updated    10/25/2009
• MG Value    $137
• MG Opinion    Undervalued
• Value Based on 3% Growth    $83
• Value Based on 0% Growth    $49
• Market Implied Growth Rate    2.65%
• Net Current Asset Value (NCAV)    -$123.92
• PEmg    13.81
• Current Ratio    1.18
• PB Ratio    1.70

Key Data:

Balance Sheet – 9/30/2009

• Current Assets    $3,966,800,000
• Current Liabilities    $3,374,190,000
• Total Debt    $10,346,270,000
• Total Assets    $36,170,340,000
• Intangible Assets    $0
• Goodwill    $377,170,000
• Total Liabilities    $27,377,770,000
• Outstanding Shares    188,920,000

Earnings Per Share – Diluted

• 2009 (estimate)    $5.82
• 2008    $6.20
• 2007    $5.60
• 2006    $5.36
• 2005    $4.40
• 2004    $3.93
• 2003    $3.48
• 2002    $2.64
• 2001    $3.13
• 2000    $2.97
• 1999    $2.25

Earnings Per Share – Modern Graham

• 2009 (estimate)    $5.72
• 2008    $5.48
• 2007    $4.93
• 2006    $4.39
• 2005    $3.77
• 2004    $3.38

Valuation History:

• 10/25/09 – Value $137, Actual Price $78.85, Undervalued & Defensive