• Google recently announced that its planned US$4 billion technology investment in Arkansas, including a new data center in West Memphis, will be powered by Entergy Arkansas and supported by a proposed 600-megawatt solar project with 350-megawatt battery storage.
• This collaboration also features Google’s US$25 million Energy Impact Fund to bolster energy affordability and workforce development efforts in Crittenden County and nearby communities.
• We'll explore how Entergy's role in facilitating major data center investments could influence its long-term growth outlook and capital allocation plans.

Find companies with promising cash flow potential yet trading below their fair value.

Entergy Investment Narrative Recap

To believe in Entergy as a shareholder, you need to accept that sustained electricity demand growth from large-scale industrial and data center developments can offset the company’s exposure to regulatory and energy transition risks. The Google Arkansas data center deal may accelerate demand and highlight Entergy’s renewable capabilities, but the biggest short term catalyst remains the ability to secure favorable state-level rate cases, while the most prominent risk is potential regulatory headwinds that could limit cost recovery. Overall, while this high-profile collaboration adds momentum, it does not fundamentally shift the balance between these factors in the near term.

Among recent developments, the June 2024 joint agreement with NextEra Energy Resources to build up to 4.5 GW of solar and storage projects stands out as directly relevant to the Google partnership. This development underscores Entergy’s emphasis on transitioning toward renewable energy, which may help address regulatory pressures and support reliability for new data center loads, in line with its stated growth and decarbonization catalysts.

By contrast, what’s less obvious to new investors is how ongoing regulatory negotiations in key states could impact Entergy’s capacity to recover its outsized infrastructure investments…

Entergy is projected to reach $15.5 billion in revenue and $2.5 billion in earnings by 2028. This outlook assumes a 7.9% annual revenue growth rate and an increase in earnings of $0.7 billion from the current level of $1.8 billion.

Uncover how Entergy's forecasts yield a $95.08 fair value, in line with its current price.

Exploring Other Perspectives

Seven different fair value estimates from the Simply Wall St Community put Entergy’s worth anywhere from US$71 to US$143 per share, showing opinions can differ widely. As electricity demand and regulatory outcomes remain key to future performance, consider how these varied outlooks might inform your own view.

Explore 7 other fair value estimates on Entergy - why the stock might be worth as much as 47% more than the current price!

Build Your Own Entergy Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Entergy research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.
• Our free Entergy research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Entergy's overall financial health at a glance.

No Opportunity In Entergy?

Opportunities like this don't last. These are today's most promising picks. Check them out now:

• These 13 companies survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. Discover why before your portfolio feels the trade war pinch.
• We've found 19 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.
• Uncover the next big thing with financially sound penny stocks that balance risk and reward.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.