Entergy Corp. (ETR) has announced plans to shelve the long-in-the-making proposed separation of its non-utility nuclear generation and nuclear services companies. The decision was precipitated by the New York Public Service Commission’s (NYPSC) rejection of the spin-off request in end-March 2010.
NYPSC is apprehensive of the financial health of the resultant company (Enexus Energy Corporation). Entergy has been contemplating the spin-off since fiscal 2007 to separate its regulated utilities and open-market generation units.
Entergy is now focused on maximizing shareholder value through share repurchases and incremental dividend. Entergy will accelerate its ongoing $750 million share repurchase program. The company also raised its quarterly dividend, which has been stagnant over the past two fiscals (2008-09). Quarterly dividend was raised to 83 cents from 75 cents payable June 1, 2010 to stockholders of record on May 12, 2010.
New Orleans-based Entergy is primarily engaged in electric power production and retail distribution. With 30,000MW of generating capacity, it distributes electricity to 2.6 million customers in Arkansas, Louisiana, Mississippi and Texas. Of this, 14,631MW are gas/oil based, 2,259MW coal-based, 70MW hydro-based and the rest is nuclear.
With around 13,000MW of nuclear-based energy, the company is one of the largest nuclear power generators in the U.S. The company also distributes natural gas to 240,000 customers in Louisiana.
Entergy ended fiscal 2009 with cash and cash equivalents of $1.7 billion. The company generated $2.9 billion of cash from operating activities in fiscal 2009. Long-term debt decreased to $10.7 billion at fiscal-end 2009 from $11.2 billion at fiscal-end 2008.
Presently, we have a market Neutral recommendation for the stock. Also, the quantitative Zacks Rank for Entergy is currently “3″ (Hold), indicating no clear directional pressure on the performance of the shares in the near term.
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