| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | n/a | n/a |
| Intrinsic value (DCF) | n/a | |
| Graham-Dodd Method | 293.66 | 1287 |
| Graham Formula | 6742.87 | 31751 |
Entergy Arkansas, Inc. (EAI) is a key player in the regulated electric utility sector, providing essential power generation, transmission, and distribution services to retail customers in Arkansas. Founded in 1926 and headquartered in Little Rock, the company operates within a stable regulatory framework, ensuring consistent revenue streams through long-term contracts and rate structures approved by state regulators. As part of the broader Entergy Corporation (ETR) family, EAI benefits from economies of scale and operational synergies while maintaining a localized focus on reliability and customer service. The utility sector, known for its defensive characteristics, offers investors steady dividends and low volatility, making EAI an attractive option for income-focused portfolios. With a market capitalization of approximately $962 million and a beta of 0.27, the company exhibits lower sensitivity to market fluctuations, aligning with its role as a critical infrastructure provider.
Entergy Arkansas, Inc. presents a conservative investment opportunity suited for risk-averse investors seeking stable dividends and predictable cash flows. The company's regulated business model ensures revenue stability, supported by a $11.9 billion revenue base and $1.06 billion in net income for the latest fiscal year. Key strengths include a low beta (0.27), indicating resilience during market downturns, and a solid dividend yield. However, risks include regulatory dependence, potential rate-case uncertainties, and high total debt ($2.3 billion), which could pressure financial flexibility. The lack of disclosed capital expenditures and cash reserves also warrants caution. Overall, EAI is best positioned for long-term income investors prioritizing safety over growth.
Entergy Arkansas operates in a highly regulated and geographically constrained market, limiting direct competition but facing indirect pressure from regional peers and renewable energy trends. Its competitive advantage stems from its monopoly-like position in Arkansas, where it is the primary electricity provider, ensuring consistent demand. The company benefits from Entergy Corporation’s integrated operations, which provide cost efficiencies and shared infrastructure. However, its reliance on fossil fuels and slower adoption of renewables compared to some peers could pose long-term risks as regulatory and consumer preferences shift toward cleaner energy. Unlike unregulated utilities, EAI’s profitability is tied to approved rate structures, reducing earnings volatility but also capping upside potential. Its low beta reflects this stability but may deter growth-oriented investors. Competitors in adjacent markets, such as NextEra Energy (NEE) and Southern Company (SO), leverage larger scale and aggressive renewable investments, which EAI lacks. Nevertheless, EAI’s regional focus and regulatory moat provide a durable, if unspectacular, business model.