Stock Analysis & Valuation Entergy New Orleans, LLC First Mortgage Bonds, 5.50% Series due April 1, 2066 (ENO)

• Previous Close: $22.56
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	235.72	945
Intrinsic value (DCF)	1708.92	7475
Graham-Dodd Method	43.22	92
Graham Formula	3106.90	13672

Strategic Investment Analysis

Company Overview

Entergy Utility Group, Inc. (NYSE: ENO) is a leading regulated electric utility company headquartered in New Orleans, Louisiana. Founded in 1926, the company specializes in electricity generation, transmission, and distribution, serving millions of customers across the U.S. Entergy operates in a stable, regulated utility sector, benefiting from predictable cash flows and long-term infrastructure investments. As a key player in the Utilities sector, Entergy focuses on delivering reliable energy solutions while transitioning toward cleaner energy sources. The company’s strategic investments in grid modernization and renewable energy align with broader industry trends toward sustainability. With a market capitalization of approximately $183.8 million, Entergy remains a critical provider in the energy landscape, balancing regulatory compliance with operational efficiency.

Investment Summary

Entergy Utility Group presents a stable investment opportunity within the regulated utility space, characterized by low volatility (beta of 0.39) and consistent revenue streams ($11.88 billion in FY 2024). The company’s net income of $1.06 billion and diluted EPS of $2.45 reflect solid profitability, supported by a regulated business model. However, investors should note the high total debt of $2.31 billion and minimal cash reserves, which could pose refinancing risks in a rising interest rate environment. The dividend yield, supported by a $1.375 per share payout, may appeal to income-focused investors, but capital expenditures and regulatory hurdles could limit near-term growth. Overall, Entergy is a defensive play suited for conservative portfolios seeking steady returns.

Competitive Analysis

Entergy operates in the highly regulated electric utility sector, where competition is limited due to regional monopolies and stringent regulatory oversight. Its competitive advantage lies in its established infrastructure, long-term customer contracts, and economies of scale in energy distribution. Unlike unregulated energy providers, Entergy benefits from guaranteed returns on capital investments approved by regulators, ensuring stable cash flows. However, the company faces challenges from increasing renewable energy mandates, requiring significant capital expenditures to transition away from fossil fuels. Compared to peers, Entergy’s relatively smaller market cap may limit its ability to fund large-scale renewable projects independently. Additionally, its high debt load could constrain financial flexibility compared to larger, more diversified utilities. Nevertheless, Entergy’s focus on grid reliability and regulatory compliance strengthens its position in its core markets.

Major Competitors

• NextEra Energy, Inc. (NEE): NextEra Energy is a leader in renewable energy, with a strong portfolio of wind and solar assets. Its competitive edge lies in its aggressive expansion into clean energy, contrasting with Entergy’s more traditional utility focus. However, NextEra’s higher valuation and exposure to unregulated markets introduce greater volatility compared to Entergy’s stable regulated operations.
• Duke Energy Corporation (DUK): Duke Energy operates across regulated and deregulated markets, with a broader geographic footprint than Entergy. Its scale allows for diversified revenue streams, but regulatory complexities in multiple jurisdictions pose risks. Duke’s larger renewable energy investments give it an advantage in sustainability trends, though Entergy’s regional focus may provide more predictable returns.
• Southern Company (SO): Southern Company shares Entergy’s emphasis on regulated utilities but has faced challenges with cost overruns in nuclear projects. Its stronger balance sheet and higher dividend yield may appeal to investors, but Entergy’s lower beta suggests comparatively lower risk in volatile markets.
• Exelon Corporation (EXC): Exelon is the largest U.S. utility by customer count, with a heavy focus on nuclear energy. Its scale and diversification provide resilience, but regulatory pressures in key markets like Illinois create uncertainty. Entergy’s more concentrated operations may allow for tighter cost control.