As the owner of the second-largest fleet of nuclear power plants in the nation, situated in prime Northeast and Midwest locations, Entergy’s (ETR) future pivots largely on the success or failure of that sector.

On the plus side, the costs of nuclear plants are a fraction of those for coal and natural gas-fired plants. On the minus side, natural gas prices are coming down and opposition to nukes has heated up in the wake of Japan’s recent nuclear crisis.

Entergy is in a particularly tough battle regarding its Vermont Yankee nuclear plant. The state legislature has threatened to revoke the plant’s operating license after 2012. Entergy also faces some hostility with New York State regulators over the renewal of operating licenses for its two Indian Point units, which expire in September 2013 and December 2015.

Still, the company sports a juicy dividend yield of 4.8 percent. Entergy posted profit of $628.1 million in the third quarter, up 27 percent from $492.9 million a year earlier. Operating revenue climbed 2 percent to $3.4 billion.

Vermont woes

Standard & Poor’s analyst Justin McCann has a neutral rating on Entergy shares. “We see limited upside to the shares until the uncertainties regarding the Vermont Yankee nuclear plant are resolved,” he writes.

“Given the problems related to ETR's management of its plant in Vermont, which is the only state with the power to reject a NRC (Nuclear Regulatory Commission) approval, it was thought that a sale to another owner could resolve the matter. However, the opposition to the plant deterred potential buyers.”

Continuing weakness in power markets and Japan’s nuclear crisis weigh on the stock too, McCann says. The situation in Japan increased opposition to the renewal of operating licenses for Entergy’s plants in Vermont and New York, he notes.

The company next reports Feb. 1.