Entergy

IThe business

Entergy makes electricity, carries it on its own wires and sells it to homes, shops and factories. Almost all of it is one business. It has five utility companies, in Arkansas, Louisiana, Mississippi, Texas and New Orleans, and a sixth that owns most of one nuclear plant. They serve 3.1M customers from New Orleans, where the group is based.⁵⁴ It owns or leases 24,621 MW of power plants: 10,579 MW of gas combined-cycle and peaking units, 6,115 MW of older gas and oil, 5,113 MW of nuclear, 1,981 MW of coal and 833 MW of solar and hydro.³

A utility needs permission for its prices. The regulator lets it charge customers enough to cover its costs and to earn a stated return on the equity it has invested. The investment on which it earns that return is called rate base. Earnings rise when rate base rises, as long as regulators approve the spending. That is the whole engine, and most of this page is about the size of the engine and the odds it runs.

Entergy was picked for this site because of its size in its home state, and nothing about it came from a screen for cheap stocks. It is also the clearest case on the site of a utility whose growth comes from a few very large customers.

The group reports one segment, Utility. In 2025 the Utility earned $2,280M and the holding company, which carries the group’s own debt, lost $521M, leaving $1,758M, or $3.91 a share.¹⁰ The wholesale nuclear business that it ran until 2022 has gone: Indian Point 2 and 3 were sold in May 2021, and in July 2025 the Louisiana and New Orleans gas distribution businesses were sold.³ What is left is wires and plants.

Who the customers are

Entergy sold 128,960 GWh at retail in 2025. Residential was 37,177, commercial 28,463, governmental 2,438 and industrial 60,882.³ Industrial customers are therefore 47% of volume, and that share is rising: industrial sales grew 7% in 2025 and 9.6% in the first nine months of 2026, driven by data centers and primary metals.³⁴ Weather-adjusted retail sales grew 4.5% in the third quarter, with residential up 6.1%.⁴ The company plans retail sales growth of about 9% a year from 2025 to 2030, which would add 68 TWh, with industrial about 16% a year.⁵ Residential and commercial sales are expected to stay about flat. All the growth is large customers.

How it earns

Revenue was $12.9B in 2025, and I would not read much into it, because fuel and purchased power are passed through to customers at cost.³ Earnings come from the return on rate base. The company’s own estimate puts rate base at $46B at the end of 2025 and $58B at the end of 2026, and it projects $97B in 2030.⁵ I weighted the allowed returns by rate base and get 9.8%. That is the number to keep in mind: the group earns near ten per cent on the equity in its utilities, and a regulator can move it by a few tenths.

Other rules let costs move faster than a rate case. In Louisiana a formula plan resets rates every year and separate riders recover new generation and wires from the month they enter service. Arkansas has a similar rider for new plants. Texas has interim riders for wires and generation.⁵ Customers who ask for new plants also pay in advance. The company received $1.27B of customer advances for construction in the first nine months of 2026, and customer advances in operating cash flow added $1.10B.⁴ That cash comes early and is an obligation to deliver power.

What happened this year

Third-quarter adjusted earnings were $1.98 a share against $1.53, and the nine-month figure was $3.89 against $3.40. Weather added about $0.24 in the quarter and $0.23 for the nine months.⁴ The company narrowed its 2026 range to $4.35 to $4.45 from $4.25 to $4.45, so the midpoint moved from $4.35 to $4.40.⁴¹⁰ It raised the dividend 6% to $0.68 a quarter.⁴ The shares closed at $111.90 on 4 November, up 2.7% on the day.¹

The plan, in a line

Two years ago the five-year capital plan was $33B. In June it was $67B, and the third-quarter update added about $1.5B to the plan, $600M of it for Google’s expansion.⁵⁸ The 2026 to 2030 total is about $68B, and it excludes capital that customers pay for directly C (calculated).⁵⁶ That averages $13.6B a year against the $7.7B spent in 2025, a year when spending was already the highest in a decade C (calculated).² Of the $67B in June, Entergy Louisiana has $42.1B, or 63%.⁵ Keep that figure in mind. It is the key to the risk section.

Where the demand comes from

The contracts that matter are with four names. I give the company’s own descriptions and leave out what I could not find in a filing.

Meta’s side of the first campus is public. In October 2025 Meta and funds managed by Blue Owl formed a joint venture, 80% Blue Owl and 20% Meta, to own the Hyperion campus, at a development cost of about $27B. Meta signed operating leases with a four-year first term and guarantees the property’s value for the first 16 years.¹¹ In July 2026 Meta put its planned investment at $50B and the capacity at 5 GW of computing.¹² Meta’s release does not mention Entergy, and Entergy’s filings do not give the megawatts of Meta’s load, so I cannot tie Meta’s 5 GW to Entergy’s 2,262 MW of plants. The Entergy side is clear: the customer pays the incremental cost to serve it, through direct payments and the revenue of the contract.³

I will not call the pipeline a fact. The plan already includes the Richland Parish and Pointe Coupee plants from the second Meta filing, and the company lists ten more combined-cycle plants as secured for growth above the plan.⁶⁵ The question for the rest of the page is who pays if any of it does not come.

IIThe moat

A durable business keeps others from taking its profits. Two questions apply. Can anyone take Entergy’s customers? And does the position let Entergy set the price? The first answer is no and the second is also no, for the same reason.

Start with the customers. In its territories Entergy is the only seller. Nobody can build a second set of wires to a house, and a data center that wants 1 GW on a fixed date in north Louisiana has one place to go, or builds its own plant. Self-supply is the realistic rival. The company lists smaller on-site backup generation as one of its own ways to speed up a customer’s start.⁵ Entergy has the land, the gas pipelines, the transmission and the permits, and it has secured firm gas transport of 1.325 Bcf a day, enough for ten new combined-cycle plants in Louisiana.⁸ A customer can still go elsewhere in the country; once it has chosen the region, there is little choice.

Now the price. Every rate is set by a public body, and the company says as much in the way it talks about its customers. It calls its pledge to big customers Fair Share Plus: data center revenues must cover the incremental cost of service and a share of fixed costs, and the company expects $7B of customer bill savings over the life of the contracts.⁵ Regulators accept that for a reason. They see customers who pay less if a big buyer shares the fixed cost. When the same regulators see risk to existing customers, they say so. In 2025 the Arkansas commission approved the Google contract and refused the ratemaking treatment of its upfront payments, then in January 2026 found that Entergy had not proved the costs of the Jefferson plant were prudent, set a cost benchmark the company says is $90M too low, and said most future plants must be competitively bid.³⁶ The Louisiana commission staff argued in June 2026 that the costs of the Cottonwood plant belong with the large data centers it serves and not with customers generally.⁶ A regulator that can do that is not a rubber stamp.

Evidence it is widening

The contract base is growing and so are the protections in it. Management says hyperscale contracts have 15- to 20-year terms, minimum bills, strong credit terms, and early-termination fees that recover costs not yet repaid.⁵ Evest’s obligations are backed by collateral and by a guaranty from Meta Platforms.⁶ For the first campus I found no mention of a parent guaranty in the text I read. In October 2025 the buildings moved into a joint venture with leases of four years.¹¹ In January 2026 intervenors asked the commission to review whether the customer’s credit protections were weakened by that financing.³ The guaranty on the second contract may be a sign that the company learned from the first. I can’t confirm it.

The scale of the project pipeline is the other point. The company has ten combined-cycle plants secured for growth above the plan, is planning for a 24 GW build-out, and shows an example plan that adds 15 to 20 GW.⁵ That is a head start that a competitor starting today does not have.

Evidence it is narrowing

Regulators and neighbours are learning to ask. The Iberville Parish council passed a two-year moratorium on batteries in July 2026, and Entergy had to replace a 200 MW battery with two smaller ones elsewhere.⁶ Intervenors in the second Meta case asked the Louisiana commission to subpoena Meta for the project’s investment, jobs and load; a judge granted that in part in July, Meta won review in August, and in September the intervenors went to court to challenge it.⁶ These are small steps, and they come one after another. And all this growth goes through one state: Louisiana has 63% of the plan.⁵

My judgement: the franchise is as strong as they come, and the price is a negotiation with five bodies, one of which is carrying most of the weight. It protects against competitors and does not protect against the regulator. I think it is stronger than a merchant generator’s position and weaker than a pipeline’s contract book, because a pipeline’s toll is set once and a utility’s is reset every year.

IIIThe competitive advantage

The relevant rivals are other utilities and large customers’ own plants. Within the regulated group, what one utility does better than the next is cost, speed and the quality of its regulatory relationships. Entergy’s record on each is mixed, and I can measure only some of it.

Where Entergy wins

Cost first. Its residential rates are below the national average and have risen about 2% a year since 2000, against 3% nationally, according to the company’s own chart from federal data.⁵ Non-production operating cost per MWh is a measure the company says beats the peers it picked; the chart has no number I could read, so I take it as a claim.⁵ The number I can read is the cost per MWh of other operating and refuelling expense, which was $20.43 for the first nine months of 2026 against $20.48, flat in a year when sales rose 5%.⁴ That is the sign of a fixed-cost base spread over more volume.

Speed second. The company is planning a 24 GW build-out and says it has ten combined-cycle plants secured for growth above the plan.⁵ Orange County Advanced Power Station, 1,215 MW in Texas, is now operating and delivering power.⁴⁵ Marsh said a standard design cut engineering time by about half.⁸ I haven’t seen cost per kilowatt, so I can’t say whether speed was bought at a price. The Louisiana filing gives one data point: seven plants of 5,278 MW for $12.9B, which is about $2,440 per kW before transmission C (calculated).⁶ Franklin Farms 1 and 2 cost about $2.39B for 1,508 MW, or $1,580 per kW, for plants due in 2028 C (calculated).³⁵ Cost per kW is 54% higher in the March 2026 filing than in the October 2024 one, and the scopes differ. It is something to watch.

Third, relationships. The company says it has delivered rates and reliability that put it among the top utilities in economic development for 19 years running, according to a trade magazine.⁴ I treat that as soft evidence. The harder evidence is that both Google and Meta, and Amazon in Mississippi, chose its territory and signed.

Where it loses

Balance sheet. Entergy’s consolidated debt is 63% of capital and the cash flow to debt measure that rating agencies watch, FFO to adjusted debt, is 16.8%.⁴ The agencies’ own versions are 17.2% (S&P, FFO to debt) and 17.1% (Moody’s, cash flow before working capital to debt) for 2025, and the finance chief said on the call she expects Moody’s measure at 15% or better in every year.⁵⁸ Debt has doubled in ten years, and the company’s funding plan adds about $32B of net debt in five more.⁵ A utility with a cushion can build fast. This one is building fast with a cushion of a point or two.

Concentration. Louisiana is 63% of the plan, and inside Louisiana the biggest projects serve one parent company, Meta. Arkansas, with Google, is 13% and Texas 11%.⁵ Many utilities have a customer or a state that matters most. Few have this much of both in one place.

Weather. Gulf-coast storms are a standing cost. Winter Storm Fern in January 2026 left Mississippi with $237.8M of restoration costs to securitize.⁶ The company says the relative size of a $1B storm falls from 3.6% of rate base in 2020 to 1.0% by 2030 as the base grows.⁵ That helps. A bigger base also holds more at risk.

Where the comparison helps is the third column. Of the three, Entergy’s is the lowest, on my cash flows. Much of the growth is already in the price.

IVManagement

Drew Marsh has been chief executive since 1 November 2022, when Leo Denault retired, and is also chair. Before that he was the finance chief.⁹ Kimberly Fontan is finance chief, Kimberly Cook-Nelson is chief operating officer, and Phillip May runs Entergy Louisiana, the company that carries 63% of the plan.⁹⁵ He took the role after the wholesale business had gone, and what he has had to manage is a capital plan that has doubled in two years.

How they are paid

Marsh’s reported pay for 2025 was $16.75M, 88 times the median employee’s.⁹ His annual bonus target is 135% of salary, raised from 130% in 2025. Sixty per cent of the bonus pool rests on adjusted earnings per share, 10% on cash flow to debt, and 10% each on safety, customer satisfaction and talent. Payouts are capped at 200% of target.⁹ Adjusted earnings per share came in at $3.91 against a target of $3.85 and paid at 156%. The credit measure paid 200%. Safety paid 50%, with 12 serious injuries and fatalities against a target of two.⁹

The long-term plan pays in performance units over three years. For 2025 to 2027 it is 80% relative share return against the 21 companies in the Philadelphia utility index, with the median paying 100% and the top quartile 200%, and 20% on climate resilience and carbon-free output.⁹ For 2023 to 2025 it was 80% relative share return and 20% cash flow to debt. Entergy ranked second in the index, in the first quartile.⁹ In 2025 its return of 25.3% ranked third of 21.⁹ All long-term awards are paid in shares, and hedging them is banned.⁹

What that pays them to do

It pays them to raise adjusted earnings per share, which in a utility means raising rate base and getting it approved, and to beat other utilities on share return, which has meant telling the market a growth story. It pays something for not weakening the balance sheet, at 10% and 20% weights in two different plans. It does not pay for the return earned on the new capital, for the cost per kilowatt of the plants, or for how many shares the plan costs. The $67B plan therefore raises pay without raising any measure that counts the equity it takes. That is not unusual. It is also the reason I have to model the share count myself.

How much of their own money is in

Marsh owned 453,125 shares at 11 March 2026, worth $50.7M at $111.90, plus 717,154 options he could exercise within 60 days.⁹ The rule for the chief executive is to own six times salary. All 22 directors and officers together held 956,103 shares, under 1% of the company.⁹ Marsh’s stake is real money, about three times his 2025 pay C (calculated). The options are worth more as the share price rises, which is part of what the pay plan is built to do.

What they did with capital over a cycle

Over the ten years to 2025 Entergy spent $47.3B on plant and paid $7.9B in dividends, against $32.3B of operating cash. The gap of $22.9B came from new debt and new shares.² Net utility plant grew 7.3% a year. On the adjusted figures, which I have from 2018, earnings per share rose 5.7% a year to 2025, while diluted shares rose 3.0% a year and net plant 7.4%.¹³¹⁰² Plant grew faster than earnings per share, which is what happens when the equity raised is spread over more shares. The dividend per share grew 4.0% a year.

Two choices stand out. First, the wholesale business: the group made a $584M loss in 2016 after impairments there, decided to exit the merchant power business, sold FitzPatrick in 2017 and Indian Point 2 and 3 in May 2021, and is now a utility only.¹⁴²³ I give that credit. A management that stops losing money in a business it cannot win in is doing the right thing, and it took years. Second, financing. The parent company has added junior subordinated notes of $1.3B in November 2025 and $1.5B in August 2026, and the rating agencies give them 50% equity credit.⁶⁸ It has sold shares in forward contracts at prices that were all below today’s: the March 2025 contracts settled at $82.09 and $81.91 in June and September 2026, and the May 2026 contracts for 19.2M shares sit at about $110.74 to be settled by April 2028.⁶¹⁵ Raising equity ahead of need locks in a price. It also gives up the rise if the shares keep going up.

My view is that management has run the utility with discipline, as the flat cost per MWh shows, and has been right about demand so far. They are paid for growth, and the owner pays for it in shares and debt. The test of the next five years is whether the $67B earns what the plan says on the capital it adds.

VFinancials

The ten years need care. Until 2022 Entergy carried a wholesale nuclear business that lost money, and the 2016 to 2021 figures include it.³ Revenue follows fuel prices that customers repay. A 2-for-1 stock split in December 2024 halves every earlier per-share figure, and I show them that way. Operating income and the plant are the cleaner measures.

Adjusted earnings rose from $970M in 2018 to $1,758M in 2025, 8.9% a year, while the shares rose 3.0% a year and the dividend per share 4.5%.¹³¹⁰ Operating income went from $469M in 2018 to $3,202M in 2025. Net utility plant went from $27.9B to $52.9B in the ten years. Revenue grew 2.0% a year from 2016, and I would not lean on it.

What the year to date shows

The first nine months of 2026 were strong. Adjusted earnings were $1,821M, or $3.89 a share on 468M diluted shares, against $1,522M and $3.40 on 447M.⁴ The Utility earned $2,245M against $1,899M, and the holding company lost $424M against $376M, because interest cost rose.⁴ Weather was worth $0.23 of the $3.89. The company gave these reasons: higher retail volume, regulatory actions, return on construction in progress, and other income, with higher interest, other operating cost and depreciation as offsets.⁴ The 2026 range is $4.35 to $4.45, which at the midpoint means about $0.51 for the fourth quarter, against $0.51 a year earlier.

Return on equity for the twelve months to September was 11.3% on an adjusted basis, down from 11.4%.⁴ That is higher than any allowed return in the table above because the group borrows at the parent to put equity into the utilities. The next section shows how much.

What an owner can really take out

Operating cash flow in 2025 was $5.15B, depreciation and amortization $2.54B, capital spending $7.69B and dividends $1.07B.² Cash left after standing still, meaning operating cash less an outlay equal to depreciation, was about $2.6B, more than the $1.76B of adjusted earnings C (calculated). That flatters it. The operating cash includes customer advances and tax credits sold. In the first nine months of 2026, advances from customers added $1.10B to operating cash, and 2026 spending was $7.74B on plant and $0.27B on nuclear fuel, against operating cash of $4.96B and dividends of $0.89B.⁴ The gap of $3.9B was met by $4.4B of new long-term debt net of repayments and $1.9B of new shares, while commercial paper fell by $0.5B C (calculated).⁴

Stock pay is small. In 2025 Entergy expensed $41M of it, from $4M of options, $26M of restricted stock and $11M of performance units, and capitalized another $21M into plant, together about 3.5% of adjusted earnings C (calculated).³ So the cash an owner can take out today is nothing after the dividend. The dividend is paid from borrowing and share sales, and so is growth. The ten years add up the same way: operating cash of $32.3B did not cover plant of $47.3B, and the shortfall including dividends was $22.9B. A growing utility does not hand over free cash. It hands over a larger asset that regulators agree to price, and the owner has to believe in the regulators to value it. I do the valuation in a way that counts only cash after the equity needed to keep growth funded.

The balance sheet

Total debt was $34.9B at 30 September 2026, 63% of capital, and adjusted debt, which leaves out securitization bonds and half of the junior notes, was $32.7B, 60% of adjusted capital.⁴ Holding-company long-term debt was $6.5B, 14% of adjusted debt, including $4.0B of junior subordinated notes.⁴ Cash was $4.2B and gross liquidity $8.55B. Cash flow to adjusted debt, after the lag of the twelve-month window, was 16.8%.⁴ Consolidated equity was $19.8B, while the utilities’ own equity was $27.8B, so the holding company has put $8.0B more into its subsidiaries than it has itself, funded by debt and other claims C (calculated).⁴ That multiple, 1.4 times, drives the return on the shareholders’ own equity and I show it in the bridge below.

Interest on debt was $1.41B in 2025 against operating income of $3.20B, a cover of 2.3 times, down from 2.5 in 2023 C (calculated).² Nothing in the debt calendar alarms me. The company said on the call that $1.5B of junior notes came in August with 50% equity credit, and $1.0B of Entergy Louisiana mortgage bonds at an average rate under 6%.⁸ The point is direction. Debt costs are rising as the plan is financed, and the plan assumes about 6% on utility debt and 6% to 7% at the parent.⁵

VIValuation

First, how this goes badly wrong

Before any numbers I asked what is most likely to hurt a holder from here, and worked back. Three things can.

• The big customers do not come, or do not pay. The plan builds gas plants and wires for a few buyers. If the Louisiana commission delays or refuses the second Meta campus, about a fifth of the five-year plan is at risk, and if Meta’s projects slow after plants are built, the cost falls on a regulator and then on other customers or on the owner.⁶⁵ The filings protect the company with minimum bills, termination fees and a Meta guaranty on the second campus. For the first, intervenors have already asked the commission to review whether its financing weakened Meta’s credit protections.⁶³ I cannot judge how a court would read that. My bear case builds three quarters of the planned rate base growth, which covers that and some slippage elsewhere.
• Rates stay where they are. The 10-year Treasury yields 4.95%.⁷ A utility is priced like a long bond with a regulator attached. At 2.7 times book, the shares assume a cost of equity near 7.0%. Each half point on the discount rate moves my base value by about $10.
• Money. The plan needs $7B of equity and $32B of net new debt in five years, and the holding company’s own operating cash flow was −$201M for nine months.⁵⁴ A bad storm, a rate decision that cuts the return, or a fall in the share price can raise the cost of financing at the same time. A $1B uninsured loss after tax cuts my base by $1.8 a share, and $2B by $3.5 C (calculated). Smaller than the first two, and the part that turns a setback into a credit event.

None of these needs the company to run its network badly. The first two are about outside forces, the third is about weather and credit. They shape the method. I value the business as a stream of owner cash after the equity it needs, and I show the range.

What an owner can really take out

A utility reports earnings, but an owner can only take out what is left after the equity needed to keep growing. In my model the company keeps its common equity at 34% of rate base in 2026, drifting to 32.5% by 2030 as the holding company uses more junior debt. Each year, owner cash is earnings less the new equity needed to keep that ratio. In 2027 my base earnings are $2,486M, and the equity needed to carry the larger base is $4,322M, so owner cash is −$1,836M. It turns positive in 2028 at $1,047M and reaches $2,885M by 2036 E (estimate). The dividend is paid anyway, and the difference is raised by selling new shares: $3,327M in 2027 in my base.

The distance from earnings to owner cash is large for the first two years. In 2027 earnings are $2,486M and owner cash is negative. Over 2027 to 2030 the base case raises $5.8B of new equity, which the company puts at $5.2B, of which $2.2B is contracted.⁶ Value in a growing utility comes from what the money earns once it is put into plant, and from the day it stops growing. In my base, 78% of the value comes after 2036. That is the weak point of any such model, and I show the range for it below.

From the allowed return to the owner’s return

Leverage matters in two ways. The utilities finance themselves about half and half, with equity near 50% of capital at Louisiana, Texas and Mississippi.⁵ On top of that, the holding company borrows to put equity into the utilities, so Entergy’s own equity of $19.8B supports $27.8B of utility equity. That multiplies the return on the shareholders’ equity by 1.4 and takes interest and costs off the top.⁴ The table builds the return from the parts.

It ties. The utilities earned about 10.0% on their equity, a little over the weighted allowed return of 9.8%, helped by weather. Times 1.44 that is 14.4% on the group’s own equity, less 3.1 points for the holding company, and the result is the 11.3% the company reports. A half-point cut in allowed returns takes about 0.7 point off the group’s return, or about $0.28 a share, because the utility equity is 1.44 times the group’s. The same multiple works in the other direction: a half-point rise adds the same. That sensitivity is why Louisiana’s decisions matter far more than their size suggests.

What the price implies

At $111.90 the market values the shares at $53.5B, and with $34.9B of debt, $0.1B of preferred and $4.2B of cash the whole company at about $84B C (calculated).⁴ That is 2.70 times book value, 25 times the 2026 midpoint and 22 times the 2027 midpoint. The dividend of $2.72 a year yields 2.4%.⁶

Three ways to read it. First, at an 8.0% cost of equity the price needs a 14.1% allowed return on utility equity every year to 2036, with my long-run return unchanged, when regulators allow 9.8% and the pending Arkansas settlement says 9.7%.⁶ Second, no plan size gets there. Building 150% of the plan, which I do not think is possible, is worth only $91 in my base. That is the finding that surprised me most. More capital at a return a little above the cost of equity adds little value, and it needs more equity. Third, it needs a 7.0% cost of equity on my base cash flows. The company’s own junior subordinated notes, issued in August 2026, pay 6.500%.⁶ An owner’s required return of 7.0% is 0.4 points above the coupon on a bond that ranks ahead of the shares. A buyer who pays this price for my base case is taking about the return of a hybrid bond.

The dividend check says the same. Next year’s dividend is $2.72. If it grows at 5.6% a year for ever, and the required return is 8.0%, the price is $111.90. At 5% it is $91. The company plans on 6% a year.⁵ A dividend that grows faster than the economy for ever is the price’s assumption, and it is not impossible while rate base doubles, but it cannot run for ever.

What I can’t judge

I can’t judge the Louisiana commission. I have not read the testimony in the second Meta case or the Cottonwood case, because it is not in an SEC filing, and I do not know how the commissioners weigh a very large new customer against bills for everyone else. I know what the filings say: the commission approved the first campus in August 2025 on a settlement, approved a $1.2B line in October 2026, and its staff has argued that the Cottonwood plant’s costs belong with the data centers it serves.³⁴⁶ I cannot say what the commission will decide in December on the second campus.

I also can’t judge Meta, and I mean its finances and its AI plans, not its words. Entergy’s protections are minimum bills, termination payments and, for the second campus, a guaranty. I do not know how those would work if a campus shrank. I can’t judge whether the 7 to 12 GW of further interest becomes contracts: management itself puts it outside the plan, with a time frame of 24 months.⁸ And I can’t forecast interest rates. I therefore show ranges, and I leave the bull weight at 25% because I have no better basis.

The discount rate

I use 8.0% for a utility’s equity. The ten-year Treasury yields 4.95% and Damodaran’s implied equity risk premium is 4.41%.⁷¹⁹ I measured Entergy’s beta against the S&P 500 on 60 monthly returns to October 2026 and got 0.43, and 0.51 over ten years.¹⁸ That gives 6.8% to 7.2%, below my rate, and my base cash flows are worth $104 to $115 at those rates, which brackets the price C (calculated). This is the main way the market could be right, and it is the input I am least sure of. I don’t lean on it. A low beta describes past moves, not what a buyer should require, and these five years included a doubling of the stock. A beta of 0.7 gives 8.0%, and I round to that. It is also 1.5 points above the coupon on the company’s newest junior debt. I use 9.0% in the bear case and 7.25% in the bull case, since for a company like this the rate is the largest single thing that can change.

That is lower than the 9.0% on the Enbridge page and the 8.75% on the Constellation Energy page. It is lower for a reason: a regulated utility with an allowed return is a calmer business than a pipeline company or a power producer. It is a judgement, and the table shows what it does.

What moves the value

Three cases

The model has one step per year to 2036. It starts at the company’s own estimate of rate base: $46B at the end of 2025 and $58B at the end of 2026, then $73B, $80B, $89B and $97B.⁵ The company computes this from last-approved rate base, adjusted for expected changes, with construction in progress included and deferred taxes deducted. I use it for the increase over 2026, times the share built in each case. After 2030 rate base grows by capital spending of $8B, $10.5B or $13B a year in 2031, rising 3% a year, less depreciation and deferred taxes of 4.8%. Common equity is held at 34% of rate base in 2026 and 32.5% from 2030, which is close to the company’s equity plan. Utility equity is 49% of rate base, and the holding company pays 5.0% after tax on the difference between utility equity and its own, plus $135M of other cost, which matches the 2026 results. Earnings are the allowed return on average utility equity less that cost. Owner cash is earnings less the equity needed. I discount it at the cost of equity, add a value for after 2036 as earnings grow at the long-run rate, and divide by 477.8M shares.⁴

Two checks on the plan. For 2027 to 2030 my base earnings per share are $5.06, $5.65, $6.11 and $6.59, against company ranges of $4.90 to $5.20, $5.55 to $5.85, $6.25 to $6.55 and $7.05 to $7.35.⁵ I match the first two and fall short of the last two because I build only nine tenths of the plan and earn 9.8% on utility equity, while the company’s ranges imply about 10.1% on a larger base E (estimate). The second check is equity: my base raises $5.8B in 2027 to 2030 against the company’s $5.2B.⁶

The weighted value on 25%, 50% and 25% is $87. It is a little above my base because the bull is further above it than the bear is below. The price is 67% of the way from my base to my bull. At the price, my bear cash flows return 5.7% a year and my bull 7.6%, all below the 8.0% I ask.

The margin of safety

My margin-of-safety price is $69: the point at which my $52 bear value is three quarters of the price paid. It is the same rule as on my other pages. It sits 38% under the market, below every close of the past year; the lowest close was $91.19.¹ At $69 the shares would trade at 1.67 times book and the dividend would yield 3.9%. Paying $69, my base cash flows return 8.9% a year and my bear flows 7.5% E (estimate). I set it that way because the main risk to a holder is in the bear case, and in the bear case the cost of equity, the allowed return and the size of the plan all go the wrong way together.

Other uses of the same dollar

The ten-year Treasury pays 4.95%, with no regulator.⁷ My base cash flows return 7.0% a year at this price, 2.0 points more, and my bear flows 5.7%, 0.7 points more. The Enbridge page, the nearest regulated-style business on this site, finds that its price returns 9.9% a year on its base cash flows against a 9.0% requirement. Enbridge is in Canadian dollars and has a very different debt load. The Constellation Energy page is the other power-demand name here, with a return of 7.5% at its price on a business whose price is set by markets and not by a commission. On those bases, Entergy returns less at its price than either. Each figure is on its own basis.

Quality, and price

These are two questions. As a business, Entergy is a good one: exclusive franchises, regulated returns that keep up if regulators allow, sales growth planned at about 9% a year, twice what it planned in 2024, a plan that is mostly approved or contracted, and a management that has run costs flat. It is not without weakness: it needs outside money every year, it leans on one state and one customer family, and its balance sheet is carrying more than it did. As a price, $111.90 is a different thing. It is 33% above my base value and 11% below my bull, at 2.7 times book value. A good business at a price that already assumes it goes well is what this looks like to me. I don’t know which way Louisiana will go, and the price does not need me to.

VIIThe case for the price

What most people miss

Three facts cut in the company’s favour and get little attention. First, customers pay early: in nine months of 2026 Entergy took in $1.27B of customer advances for construction.⁴⁶ Second, the newest financing sits off the balance sheet while it is built. In October 2026 outside investors bought the Waterford 6 project and agreed to spend up to $1.875B to finish it. Entergy Louisiana records no asset or debt until the lease starts in late 2029. It helps credit measures now and is an obligation later.⁶ Third, part of the equity is already sold. Forwards on 19.2M shares at about $110.74, to settle by April 2028, cover $2.2B of the $5.2B needed for 2027 to 2030.⁶⁵

The bull case

In plain words: demand in a region with cheap land, gas and willing regulators is growing about twice as fast as planned in 2024, and a utility earns a return on what it builds.⁵ Drew Marsh wrote on 2 November that the company has a “clear line of sight” to its objectives.⁴ Secondhand, from a third-party transcript that says parts were machine-produced: Kimberly Fontan said sales support a “greater-than-8% trajectory”, and Marsh put further data center interest at 7 to 12 GW, outside the plan.⁸

Also secondhand, from MarketBeat’s list: JPMorgan cut its target to $130 on 13 October, Truist set $119 on 12 October and Morgan Stanley raised its to $101 on 21 October. The average is $120.78.²⁰ I have not read them. Among known investors the record is thin. Vanguard, BlackRock and State Street own 24%, which is index money.⁹ The latest 13F filings of 18 funds, including Altimeter, Coatue, Baupost and Elliott, show no Entergy position.²¹ I found no comments from Ackman, Gurley, Chamath, Wood or Gerstner.

Against reality

Today’s numbers support the near part. Earnings are on track for the guidance midpoint, helped by weather. If they deliver the plan and the outlook ranges, with $7.20 a share in 2030, the price is possible. To earn 8% a year from $111.90 to the end of 2030, the shares would need to be worth about $139 then, after about $15 of dividends E (estimate). That is 19.3 times the 2030 midpoint and 21.1 times my base of $6.59, against 25 times this year’s midpoint today. So the price needs the plan and a multiple near 20 in 2030.

The bull value of $126 needs four things. The full plan, no delays: 55%. Allowed returns near 10.2%, up from 9.8%: 35%. A 7.25% cost of equity: 30%. No storm, ruling or credit event that matters: 80%. Those are guesses, and together they give 5% E (estimate). The legs overlap, so perhaps 15% to 25%; my weight is at the top.

What a 10x would take. Ten times $111.90 is $1,119, about $535B of value. At 20 times earnings that needs about $26.7B of net income a year, thirteen times my 2026 estimate and twice Entergy’s 2025 revenue of $12.9B C (calculated).³ At an 11% return it needs about $243B of equity, twelve times today’s.⁴ Ten times in ten years is 26% a year; in twenty, 12%. The shares rose 3.2 times in ten years and 57% in two.¹ A utility grows with its rate base, and no plan multiplies that tenfold. Close to impossible.

Where I come down

The third-quarter results, the Google expansion and the guaranty on the second Meta contract make the plan look likelier and the bear case less so. The 2.7% rise on 4 November did not move me, nor did the targets. A lower cost of equity would raise my values by about $10 a share for each half point. So would approval of the second campus as filed, and signed contracts for part of the 7 to 12 GW. A half-point cut in Louisiana’s allowed return would lower them by about $3.

VIIIRisks, and what would change my view

The three ways this goes badly wrong are at the start of Valuation. These are the rest.

• Louisiana, again. The commission will decide the second Meta campus in December 2026, the Cottonwood purchase in a hearing set for February 2027, and the formula plan extension by year end.⁶⁸ Louisiana is 63% of the plan.⁵ A delay of a quarter is not a problem. A change of attitude would be.
• Meta. The first campus is owned by a joint venture in which Blue Owl has 80% and Meta 20%, and Meta leases it on four-year terms with a value guarantee. Intervenors want a prudence review, and a court case is open over what Meta must disclose in the second.¹¹³⁶ I cannot see Meta’s finances at the project level and I do not try.
• Cost per kilowatt. Franklin Farms 1 and 2 are about $1,580 per kW; the seven plants filed in March are about $2,440 per kW before transmission C (calculated).³⁶ The company says standard design and bulk buying help. Turbines, labour and tariffs go the other way, and the plan assumes 30 GW of new and repowered resources by 2035.⁵
• Storms. A Gulf hurricane in Louisiana or Texas is a standing risk, and Winter Storm Fern in January 2026 cost Mississippi $237.8M to restore.⁶ Costs are usually recovered, with a delay, and the balance sheet carries the delay.
• Tax credits and fuel. The 2025 tax law shortens the window for solar and wind credits, and the plan has about $7B of renewables and storage.³⁵ The company sold its 2026 production tax credits for $256M of cash in October, so it relies on a market for transferring credits.⁸ Gas is the marginal fuel; a spike reaches bills before it reaches earnings.
• The cost of money. The plan assumes about 6% on utility debt and 6% to 7% at the parent.⁵ The new junior notes pay 6.500%.⁶ At a 5% Treasury, those rates leave no room for the yield curve to rise.
• Credit. FFO to debt is 16.8%, the finance chief expects Moody’s measure at 15% or better, and the plan adds about $32B of net debt.⁴⁸⁵ A downgrade raises the cost of debt for the whole system and may not be passed through in full.
• Interest rates and the multiple. At 2.7 times book and 25 times earnings, the shares are priced as a growth stock. At 2.0 times book the shares would be worth $83, still above my base C (calculated).
• Dilution. The model assumes new equity sold at prices rising 6% a year from $112. At lower prices the same $5.8B would need more shares.