Entergy Corporation (ETR): A Bull Case Theory

Published on September 28, 2025 at 7:45 pm by Ricardo Pillai in News, Stock Analysis

We came across a bullish thesis on Entergy Corporation on Investing With Purpose’s Substack. In this article, we will summarize the bulls’ thesis on ETR. Entergy Corporation’s share was trading at $89.24 as of September 22nd. ETR’s trailing and forward P/E were 22.14 and 20.45, respectively according to Yahoo Finance.

Entergy Corporation (ETR) is executing a capital-intensive, multi-year buildout to strengthen the Southern U.S. power grid while supporting growing industrial and hyperscale data center demand. Serving roughly 3 million customers across Arkansas, Louisiana, Mississippi, and Texas, the company operates a diversified generation mix, including five nuclear reactors supplying ~5,000 MW of carbon-free energy, a large gas fleet, and expanding renewables.

Entergy’s ongoing $37 billion 2025–2028 plan focuses on generation additions, transmission and distribution upgrades, and storm-hardening, ensuring long-term reliability while integrating industrial-scale renewable projects funded by large customers like AWS and AVAIO. This structure allows Entergy to grow capacity and modernize the grid without imposing disproportionate rate increases on other customers.

Financially, ETR exhibits robust profitability for a regulated utility, with a gross margin of 49.1%, operating margin of 26.9%, and EBITDA margin of ~49.3%, supported by disciplined cost management and constructive rate recovery. Operating cash flow of $4.74 billion contrasts with a heavy capex spend of $7.1 billion, resulting in a negative free cash flow, which is expected given the growth-focused investment cycle. The balance sheet remains consistent with peers, with total debt of $30.4 billion, debt/EBITDA around 5.0x, and EBIT/interest coverage of 2.9x.

Near-term value hinges on the cadence of regulatory approvals, plant commissioning, and industrial load growth. Louisiana and Mississippi projects illustrate the model: incremental costs are borne by large users, enabling grid resilience and new capacity without rate shocks. Technically, the stock has pulled back slightly from all-time highs but remains in a long-term uptrend, offering potential entry points near $84–$86, with targets of $96–$102 if momentum continues. Entergy represents a patient, execution-driven opportunity combining regulated growth, infrastructure modernization, and industrial load tailwinds, delivering durable earnings and compounding returns over the long term.

Previously we covered a bullish thesis on Evergy, Inc. (EVRG) by Hidden Market Gems in April 2025, which highlighted its defensive nature, resilience to macro volatility, low exposure to global supply chains, and high dividend yield. The company’s stock price has appreciated approximately by 36.93% since our coverage. The thesis still stands as EVRG remains stable. Investing With Purpose shares a similar view but emphasizes Entergy’s capital-intensive growth and grid modernization.