A Look at Entergy's Valuation After Jefferies Highlights Data Center Growth Opportunity

Entergy (NYSE:ETR) has taken the spotlight after Jefferies initiated coverage, calling it the “best-positioned AI load play” among utilities. The move comes as Entergy’s deep connections with global technology leaders, such as Meta and Amazon, are translating into significant, forward-looking power contracts and an energized growth outlook. For investors, the story is now shifting from Entergy as a traditional regulated utility to a key player powering the digital economy’s next chapter.

This fresh wave of optimism follows a year where Entergy’s shares have gained 45%, with a momentum surge over the past three months. New partnerships with hyperscalers, news of major grid improvement projects in Mississippi, and a strong dividend track record have all contributed to a positive market narrative. These developments suggest Entergy is not just keeping pace; it may be pulling ahead of its peers as industrial power demand accelerates.

But with the stock rallying and bold forecasts making headlines, is Entergy still undervalued, or has the market already baked in all that future growth?

Most Popular Narrative: 1.9% Undervalued

The prevailing narrative sees Entergy as slightly undervalued, with analysts suggesting modest upside at current prices, based on robust growth prospects and structural advantages in its core markets.

Strong growth in electricity demand and regulatory support, combined with major capital investments, are set to drive higher revenues and improve earnings consistency. Focus on renewables, grid resilience, and operational efficiency positions Entergy to benefit from decarbonization trends and sustain profitability despite rising costs.

What is behind this subtle call of undervaluation? The secret lies in a handful of ambitious assumptions. There is one big bet that could propel Entergy beyond its peers, and you might be surprised how key drivers like future earnings, growth rates and sector-beating profit multiples factor into this bullish analysis. Do you want to see what’s powering this narrative’s fair value?

Result: Fair Value of $94.08 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks remain, as Entergy’s heavy capital needs and exposure to regulatory shifts or extreme weather could quickly challenge the bullish outlook.

Find out about the key risks to this Entergy narrative.

Another View: What Does Our DCF Model Say?

While analysts find Entergy slightly undervalued using price-based comparisons, our DCF model tells a different story. In contrast, this approach currently suggests the shares might in fact be trading above fair value. Could the market be too optimistic?

Look into how the SWS DCF model arrives at its fair value.

Stay updated when valuation signals shift by adding Entergy to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Entergy Narrative

If you have a different perspective or want to dive deeper into the numbers, you can craft your own perspective in just a few minutes. Do it your way.

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.

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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.

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