Entergy (ETR): Evaluating Valuation After Securing Google Data Center Power Deal

Entergy's recent market momentum appears closely tied to its announcement that it will supply electricity to Google’s upcoming $4 billion data center in Arkansas. This move highlights how regulated utilities like Entergy are tapping into new growth, fueled by rising demand from large-scale AI infrastructure projects.

See our latest analysis for Entergy.

Momentum has clearly been picking up for Entergy, with the share price advancing 26% year-to-date and total shareholder return hitting nearly 49% over the past year. Recent announcements, such as the Google data center partnership and ongoing talks around innovative nuclear technology, have reinforced optimism about Entergy’s future growth potential. This has positioned the company in the spotlight for investors seeking dependable returns.

If the surge in utility stocks has you searching for other bright spots, now is a great time to discover fast growing stocks with high insider ownership

Yet with shares at all-time highs and growing optimism around data center partnerships, investors must ask whether Entergy is undervalued relative to its future prospects or if the market has already priced in the next leg of growth.

Most Popular Narrative: Fairly Valued

Entergy’s most followed narrative sees its fair value coming in just above the last closing price. That suggests the market is largely aligned with analysts’ outlook, but a slight premium is built in as investors weigh emerging growth levers against underlying risks.

Substantial long-term electricity demand growth is expected from industrial development, population migration to the Gulf South, and large-scale data center expansions in Entergy's service territory. This could potentially drive robust load growth and higher regulated revenues.

Read the complete narrative.

How are analysts getting to this number? Their blueprint is built on aggressive investment, expanding profit margins, and a projected pricing power that is not typical in the sector. Want to see which financial levers and growth assumptions shape this valuation? Unpack the drivers behind Entergy's fair value and decide if the consensus matches your expectations.

Result: Fair Value of $95.08 (ABOUT RIGHT)

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

However, a sudden spike in regulatory hurdles or unplanned capital needs could quickly test investors’ optimism and shift sentiment around Entergy’s growth outlook.

Find out about the key risks to this Entergy narrative.

Another View: What About the SWS DCF Model?

While multiples suggest Entergy is fairly valued, the SWS DCF model takes a different approach by forecasting future cash flows. According to this method, Entergy appears overvalued at its current price. Does this cash flow calculation point to hidden risks, or does it miss upcoming growth drivers?

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

Build Your Own Entergy Narrative

If you want to take a different view or prefer to dig into the numbers on your own, you can build a personalized narrative 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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