Executive Summary / Key Takeaways

• Accelerated Growth Trajectory: Entergy is experiencing unprecedented industrial and data center demand, driving a raised 4-year capital plan of $40 billion and an adjusted EPS CAGR projected to be "greater than 8%" through 2028, underpinned by a 13% industrial sales growth rate.
• Strategic Infrastructure Investment: The company is making substantial investments in new generation (3 GW solar, 1.4 GW battery, 8 GW gas) and transmission ($8 billion, including 460 miles of 500 kV lines) to meet surging load and enhance grid resilience, with a focus on standardized designs and securing long-lead time equipment.
• Proactive Regulatory & Legislative Engagement: Entergy has successfully secured favorable regulatory outcomes and legislative support in Arkansas, Louisiana, and Texas, streamlining project approvals, accelerating storm cost recovery, and enabling timely investment for economic development.
• Financial Discipline Amidst Growth: Despite significant capital deployment, ETR maintains strong credit metrics, targeting a Moody's FFO to debt ratio of 15% over the forecast period, supported by optimized operating cash flow, nuclear PTC monetization, and efficient equity financing.
• Differentiated Competitive Edge: As a vertically integrated utility with deep regional relationships and a "one-stop shop" approach, Entergy offers a unique value proposition for large industrial and data center customers, enabling rapid project delivery and cost-sharing benefits for existing customers.

Powering a New Era: Entergy's Strategic Evolution

Entergy Corporation, founded in 1913 in New Orleans, Louisiana, has a century-long history of powering the Gulf South. Initially a diversified energy provider, the company has strategically refined its focus, notably exiting its merchant power business prior to 2023 and, most recently, divesting its natural gas distribution businesses on July 1, 2025. This deliberate streamlining allows Entergy to concentrate entirely on its core electric utility operations, a move proving prescient amidst a burgeoning industrial renaissance in its service territory.

The company's overarching strategy is rooted in customer-centricity and proactive stakeholder engagement, aiming to be the "premier utility." This involves not only meeting the escalating energy demands of a rapidly growing industrial base but also enhancing grid resilience and reliability for its 3 million utility customers. Entergy's vertically integrated model, encompassing generation, transmission, and distribution, provides a unique "one-stop shop" solution, enabling rapid and comprehensive technical support for large-scale projects. This integrated approach, combined with deep local relationships, facilitates alignment among state and local governments, communities, regulators, and customers, a critical advantage in accelerating project timelines and securing necessary approvals.

Broad industry trends are significantly shaping Entergy's strategic direction. The onshoring of manufacturing, the global push for clean energy, widespread electrification, and the exponential growth of technology (particularly AI and data centers) are converging to create unprecedented electricity demand in the Gulf South. Entergy is actively capitalizing on these macro trends, positioning itself as a vital partner in the region's economic expansion.

Technological Edge and Operational Excellence

Entergy's operational strength and technological foresight are central to its competitive advantage. The company is investing heavily in a diversified generation portfolio, including advanced natural gas, nuclear, and renewable energy sources. Its new highly efficient gas units, such as the Orange County Advanced Power Station in Texas and the Delta Blues facility in Mississippi, are designed to be hydrogen-ready and enabled for future carbon capture and storage (CCS). This forward-looking design anticipates evolving federal emissions requirements and supports customer decarbonization goals. While specific quantitative benefits for hydrogen co-firing or CCS are not yet fully disclosed for these projects, the strategic intent is to offer flexible, lower-carbon dispatchable power.

In nuclear operations, Entergy maintains a strong fleet, with Waterford 3 and Grand Gulf celebrating 40 years of operation. The recent Waterford 3 refueling outage included a low-pressure turbine replacement, expected to increase the unit's capacity by an estimated 40 megawatts by fall 2026. Similar turbine rod replacements at ANO 1 in fall 2025 are planned for future upgrades, contributing to a potential total of approximately 275 megawatts of capacity upgrades across the nuclear fleet. These upgrades enhance efficiency and reliability, providing stable, carbon-free baseload power. Entergy also holds an early site permit for a potential new reactor at Grand Gulf, which it intends to renew, and is exploring Small Modular Reactor (SMR) technology through an MOU with Holtec. The company's deep nuclear expertise and proactive engagement in state working groups for nuclear expansion underscore its commitment to this critical clean energy source.

Beyond generation, Entergy is transforming its transmission and distribution infrastructure. The company's accelerated resilience program, with over $2 billion approved (mostly in Louisiana) and $400 million invested to date, focuses on hardening the grid against extreme weather. Projects include new substations designed to withstand flooding and hurricane-force winds, and the installation of thousands of hardened poles. New 500 kV transmission projects, such as Mount Olive to Sarepta, SETEX, Cypress to Legend, and Babel to Webre, will add 460 miles of high-voltage lines, representing about 20% of the 500 kV system. These lines are designed to loop existing transmission, automatically diverting power to avoid outages during events, significantly enhancing grid resilience. The company is also leveraging technology like cameras on planes and drones to quickly assess storm damage and optimize restoration efforts.

Financial Performance and Outlook

Entergy's financial performance in the first half of 2025 reflects the early benefits of its strategic initiatives. For the second quarter of 2025, the company reported adjusted earnings per share of $1.05. This was driven by the net effect of investments for customers, higher retail sales volume, and increased other income, partially offset by higher other operation and maintenance (O&M) expenses and MISO capacity costs. Retail electric price increases, stemming from formula rate plan adjustments in Arkansas, Louisiana, Mississippi, and Texas, also contributed positively.

Total operating revenues for the Utility segment reached $3.32 billion for the three months ended June 30, 2025, up from $2.94 billion in the prior year period. For the six months ended June 30, 2025, Utility operating revenues were $6.15 billion, compared to $5.71 billion in the same period of 2024. Net income for the Utility segment was $602.17 million in Q2 2025, a significant increase from $443.32 million in Q2 2024. Year-to-date, Utility net income was $1.09 billion, up from $639.30 million.

Industrial sales have been a standout performer, growing nearly 12% in Q2 2025 and 11% year-to-date, primarily from new and expanding customers. Weather-adjusted retail sales growth was robust at 4.5% in Q2 2025. The company's 4-year industrial sales compound annual growth rate is now projected at an impressive 13% through 2028.

Entergy's liquidity and capital resources remain strong. The company has a $3 billion credit facility and a $2 billion commercial paper program, with $459 million outstanding as of June 30, 2025. In May 2025, Entergy physically settled $806 million of previously outstanding equity forwards, demonstrating its ability to secure capital efficiently. The updated 4-year capital plan (2025-2028) now stands at $40 billion, an increase of $3 billion, reflecting incremental investments in generation and transmission.

Operating cash flow increased by $252 million in the first half of 2025, boosted by $313 million in advance payments from customer agreements. The company also recorded approximately $570 million in nuclear Production Tax Credits (PTCs) for 2024, which are expected to be monetized later in 2025, further enhancing cash flow.

Entergy has affirmed its 2025 adjusted EPS guidance and is raising its longer-term outlook, with adjusted EPS for 2027 increasing by $0.05 and 2028 by $0.10. The long-term growth rate through 2028 is now projected to be "greater than 8%." The Board recently approved a 6% dividend increase, a growth rate expected to be maintained throughout the outlook period, with the payout ratio declining as earnings grow.

Competitive Landscape and Strategic Positioning

Entergy operates within the highly regulated U.S. utility sector, competing with other large, vertically integrated utilities such as Southern Company , Duke Energy , NextEra Energy , Dominion Energy (D), and Exelon Corporation . Entergy's competitive advantages stem from its unique regional focus, diversified energy mix, and deep stakeholder relationships.

Compared to Southern Company , Entergy's balanced energy mix, including a significant nuclear fleet, offers greater operational resilience in fluctuating energy markets. While Southern Company (SO) has a strong brand in the Southeast, Entergy's specialized expertise in extreme weather resilience in the Gulf Coast provides a distinct value proposition in disaster recovery and system reliability. Entergy's nuclear operations, like those of Exelon (EXC), provide stable, low-variable-cost generation, contributing to consistent profitability.

Against Duke Energy , Entergy's higher proportion of nuclear capacity may offer greater efficiency in base-load power. Entergy's focus on serving specific markets like Louisiana and Texas allows it to develop specialized services for high-risk areas, differentiating its offerings. However, Duke Energy's (DUK) broader renewable integration efforts could position it ahead in capturing emerging clean energy trends.

NextEra Energy , with its aggressive focus on renewables, often exhibits faster revenue growth and higher profitability margins. While Entergy is also expanding its renewable portfolio, NextEra's (NEE) pioneering role in large-scale renewable projects might give it an edge in innovation speed. Nevertheless, Entergy's vertically integrated model and ability to provide a "complete technical solution" from generation to transmission and retail access offers a comprehensive service that pure-play renewable developers or less integrated utilities may struggle to match. This "one-stop shop" approach is a significant competitive moat, particularly for large industrial and data center customers who prioritize speed-to-market and integrated solutions.

Entergy's customer-centric economic development model, which ensures new large customers contribute to local communities and share in infrastructure costs, is a key differentiator. This approach helps maintain competitive rates for existing customers, a critical factor in a regulated environment. The company's ability to secure significant new load, such as the Meta (META) Hyperion data center project and new growth in Arkansas and Mississippi, underscores its effectiveness in this competitive arena.

Risks and Mitigation

Despite its strong growth trajectory, Entergy faces several risks. The substantial capital plan exposes the company to construction and cost overruns, though its strategy of using standardized designs and long-standing EPC relationships aims to mitigate this. The uncertainty surrounding nuclear construction risk, particularly for new nuclear facilities, remains a significant challenge, with management acknowledging that operating companies are not large enough to bear this risk alone and are seeking state, federal, vendor, or sovereign fund support.

Geographic exposure to extreme weather events, such as hurricanes, is an inherent risk. However, Entergy is actively mitigating this through its accelerated resilience programs and new transmission investments designed to harden the grid and improve restoration times. The implementation of expedited storm securitization processes in Louisiana and Texas further reduces financial exposure and carrying costs.

Regulatory and legislative changes, while often supportive, can introduce uncertainty. The impact of international trade policies and tariffs on capital expenditures is a concern, though Entergy estimates the impact to be manageable (approximately 1% of the $37 billion plan) and is pursuing alternative supply sourcing strategies. The uncertainty surrounding nuclear Production Tax Credits (PTCs) due to pending Treasury guidance is also a factor, though the company has recognized 2024 PTCs and views them as credit positive.

Finally, the concentration of business with a small number of large customers, particularly in emerging technology industries like AI, could introduce demand volatility. However, Entergy's conservative financial planning, which includes new customers at minimum bill levels until agreements are signed, helps manage this risk.

Conclusion

Entergy Corporation stands at the precipice of a transformative growth phase, driven by the insatiable demand for electricity from industrial expansion and the burgeoning data center industry in the Gulf South. Its century-long history has culminated in a refined strategy centered on customer-first principles, operational excellence, and proactive stakeholder engagement. The company's vertically integrated model, coupled with its deep regional ties and a commitment to advanced energy technologies, provides a formidable competitive advantage in attracting and serving large, high-load customers.

With a robust $40 billion capital plan, a projected industrial sales growth rate of 13%, and an adjusted EPS CAGR exceeding 8% through 2028, Entergy is poised for significant value creation. While challenges such as weather risks and the complexities of new nuclear development persist, the company's strategic investments in grid resilience, its disciplined financial management, and its ability to secure favorable regulatory and legislative outcomes underscore a compelling investment thesis. Entergy's journey to be the "premier utility" is well underway, promising sustainable growth and reliable returns for its owners as it powers the economic renaissance of its service territory.