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Here's Why You Should Add Vistra (VST) to Your Portfolio Now
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Vistra Corp.’s (VST - Free Report) systematic capital investment plans and expanding customer base should further drive its performance. Given its growth opportunities and dividend growth, VST makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #1 (Strong Buy) company a strong investment pick at the moment.
Growth Projections
The Zacks Consensus Estimate for VST’s 2024 earnings per share (EPS) is pinned at $3.80, indicating year-over-year growth of 5.9%.
The consensus mark for 2024 revenues is pegged at $17.84 billion, indicating a year-over-year increase of 20.8%.
The Zacks Consensus Estimate for 2025 EPS has increased 11.5% to $4.55 in the past seven days.
Return on Equity (ROE)
ROE indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, Vistra’s ROE is 24.72%, much higher than the industry’s average of 9.66%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
Solvency & Liquidity Ratio
The times interest earned (TIE) ratio is a solvency ratio, which is used to measure how well the company can cover its interest obligations. The TIE at the end of first-quarter 2024 was 2.6, which being greater than one indicates that Vistra is in a good position to meet its interest obligations.
The current ratio at the end of the first quarter was 1.08, which, being greater than one, indicates the company’s ability to meet its future short-term liabilities without difficulties.
Dividend History
Vistra has been consistently increasing shareholders’ value by paying dividends. In May 2024, the company increased its quarterly dividend by 7% from the year-ago level. The new quarterly dividend is 21.75 cents per share, resulting in an annualized dividend of 87 cents. The company is targeting $300 million in dividends annually.
Share Repurchase Program
VST has executed a share repurchase program worth $3.9 billion from November 2021 through May 3, 2024. This represents a 28% reduction of total shares outstanding since the program was announced in November 2021. VST further expects to utilize at least $2.25 billion for share repurchases in 2024 and 2025.
Strategic Investments
Vistra has been making systematic capital expenditures to further strengthen its operations. It expects to invest nearly $1.94 billion and $1.75 billion in 2024 and 2025, respectively. Nearly 42% of the total capital expenditure in 2024 is expected to be for nuclear & fossil maintenance.
Price Performance
In the past three months, VST’s shares have rallied 92.7% compared with the industry’s growth of 6.4%.
PNW’s long-term earnings (three-to-five-year) growth rate is 8.22%. It delivered an average earnings surprise of 233.5% in the last four quarters.
PPL’s long-term earnings growth rate is 6.82%. The Zacks Consensus Estimate for 2024 EPS implies a year-over-year improvement of 6.9%.
The Zacks Consensus Estimate for IDA’s 2024 EPS indicates a year-over-year increase of 4.1%. The company delivered an average earnings surprise of 6.8% in the last four quarters.
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Here's Why You Should Add Vistra (VST) to Your Portfolio Now
Vistra Corp.’s (VST - Free Report) systematic capital investment plans and expanding customer base should further drive its performance. Given its growth opportunities and dividend growth, VST makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #1 (Strong Buy) company a strong investment pick at the moment.
Growth Projections
The Zacks Consensus Estimate for VST’s 2024 earnings per share (EPS) is pinned at $3.80, indicating year-over-year growth of 5.9%.
The consensus mark for 2024 revenues is pegged at $17.84 billion, indicating a year-over-year increase of 20.8%.
The Zacks Consensus Estimate for 2025 EPS has increased 11.5% to $4.55 in the past seven days.
Return on Equity (ROE)
ROE indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, Vistra’s ROE is 24.72%, much higher than the industry’s average of 9.66%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
Solvency & Liquidity Ratio
The times interest earned (TIE) ratio is a solvency ratio, which is used to measure how well the company can cover its interest obligations. The TIE at the end of first-quarter 2024 was 2.6, which being greater than one indicates that Vistra is in a good position to meet its interest obligations.
The current ratio at the end of the first quarter was 1.08, which, being greater than one, indicates the company’s ability to meet its future short-term liabilities without difficulties.
Dividend History
Vistra has been consistently increasing shareholders’ value by paying dividends. In May 2024, the company increased its quarterly dividend by 7% from the year-ago level. The new quarterly dividend is 21.75 cents per share, resulting in an annualized dividend of 87 cents. The company is targeting $300 million in dividends annually.
Share Repurchase Program
VST has executed a share repurchase program worth $3.9 billion from November 2021 through May 3, 2024. This represents a 28% reduction of total shares outstanding since the program was announced in November 2021. VST further expects to utilize at least $2.25 billion for share repurchases in 2024 and 2025.
Strategic Investments
Vistra has been making systematic capital expenditures to further strengthen its operations. It expects to invest nearly $1.94 billion and $1.75 billion in 2024 and 2025, respectively. Nearly 42% of the total capital expenditure in 2024 is expected to be for nuclear & fossil maintenance.
Price Performance
In the past three months, VST’s shares have rallied 92.7% compared with the industry’s growth of 6.4%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are Pinnacle West Capital Corporation (PNW - Free Report) , PPL Corporation (PPL - Free Report) and IDACORP (IDA - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
PNW’s long-term earnings (three-to-five-year) growth rate is 8.22%. It delivered an average earnings surprise of 233.5% in the last four quarters.
PPL’s long-term earnings growth rate is 6.82%. The Zacks Consensus Estimate for 2024 EPS implies a year-over-year improvement of 6.9%.
The Zacks Consensus Estimate for IDA’s 2024 EPS indicates a year-over-year increase of 4.1%. The company delivered an average earnings surprise of 6.8% in the last four quarters.