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Vistra (VST) Surges 136.2% Year to Date: Time to Buy the Stock?
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Shares of Vistra Corp. (VST - Free Report) have rallied 136.2% year to date compared with its industry’s growth of 0.8%, courtesy of its strong retail and commercial operations. In the second quarter of 2024, the company announced a plan to add up to 2,000 MW of gas-fueled dispatchable power in ERCOT to meet the rising demand for clean energy in its service area.
Vistra has outperformed its sector and the S&P 500 in the year-to-date period.
Vistra Outperforms Industry, Sector & S&P YTD
Image Source: Zacks Investment Research
Factors Acting in Favor of Vistra
The demand for clean electricity is rising in Vistra’s service area. Its ability toproduce a high volume of emission-free electricity from its solar, natural gas, nuclear and other alternative energy sources is the primary contributor to its performance.
The company is working on its four strategic priorities: delivering strong and stable earnings, executing a disciplined capital allocation strategy, maintaining balance sheet strength and supporting a sustainable energy future. Through its Vistra Zero initiative, the company generates zero-carbon electricity to supply green electricity to its customers.
The clean electricity demand from US Data centers and Permian electrification is expected to boost demand by 55 gigawatts (GW) by 2030 from 2023 levels in the geographies the company serves. Vistra has plans to expand its operation and clean energy production volumes through organic and organic initiatives.
Vistra plans to build up to 860 MW of advanced simple-cycle peaker plants to be located in West Texas. Vistra will repower its set to retire coal-fueled Coleto Creek Power Plant with a 600 MW gas-fueled plant. The company will also complete several projects at its existing gas plants that will add more than 500 MW of summer capacity and 100 MW of winter capacity. The company began construction on two of its three Illinois solar and energy storage projects, part of the Coal to Solar and Energy Storage Initiative.
In addition to organic initiatives, the acquisition of Energy Harbor Corporation added nearly 4,000 megawatts (MW) of 24/7 nuclear generation capacity to Vistra’s generation portfolio for addressing the clean energy demand. This acquisition is expected to create recurring annual synergies of $150 million by 2026.
Estimates Moving Up
The Zacks Consensus Estimate for Vistra’s 2024 and 2025 earnings per share has increased 9.4% and 31.9% in the past 60 days, respectively. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.
The Zacks Consensus Estimate for 2024 and 2025 earnings per share of its peer NRG Energy (NRG - Free Report) has moved up by 23.7% and 12%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
Returns Higher Than the Industry
Return on invested capital (ROIC) has outperformed the industry average in the trailing 12 months. ROIC of VST was 5.01% compared with the industry average of 3.4%. The company has been investing effectively in profitable projects, which is evident from its ROIC.
Image Source: Zacks Investment Research
VST’s trailing 12-month return on equity is 24.7%, ahead of the industry average of 9.5%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders’ funds in its operations to generate income.
Image Source: Zacks Investment Research
Boosting Shareholders' Value
Vistra continues to return value to its shareholders through its share repurchase program and dividend payments.
Vistra has repurchased shares worth $3.9 billion from November 2021 through May 3, 2024, resulting in a 28% reduction in outstanding shares from November 2021 levels. The management expects to continue with the buyback of shares and aims to repurchase at least $2.25 billion worth of outstanding shares between 2024 and 2025.
The board has also approved and paid a quarterly dividend of 21.75 cents for the second quarter of 2024, reflecting an increase of 7% from the second quarter of 2023. Check VST’s dividend history here.
Vistra Trading at a Premium
The company is currently valued at a premium compared to its industry on forward 12 months P/E basis.
Image Source: Zacks Investment Research
Conclusion
Vistra operates in an area where the demand for clean electricity is going up. The company is responding to rising demand by adding new clean energy assets to its portfolio. This reliable and affordable clean electricity provider is poised for further upside from current levels.
Given the positive movement in earnings estimates and strong return on capital, Zacks Rank #1 (Strong Buy) Vistra is currently an ideal candidate to add to your portfolio.
Image: Bigstock
Vistra (VST) Surges 136.2% Year to Date: Time to Buy the Stock?
Shares of Vistra Corp. (VST - Free Report) have rallied 136.2% year to date compared with its industry’s growth of 0.8%, courtesy of its strong retail and commercial operations. In the second quarter of 2024, the company announced a plan to add up to 2,000 MW of gas-fueled dispatchable power in ERCOT to meet the rising demand for clean energy in its service area.
Vistra has outperformed its sector and the S&P 500 in the year-to-date period.
Vistra Outperforms Industry, Sector & S&P YTD
Image Source: Zacks Investment Research
Factors Acting in Favor of Vistra
The demand for clean electricity is rising in Vistra’s service area. Its ability toproduce a high volume of emission-free electricity from its solar, natural gas, nuclear and other alternative energy sources is the primary contributor to its performance.
The company is working on its four strategic priorities: delivering strong and stable earnings, executing a disciplined capital allocation strategy, maintaining balance sheet strength and supporting a sustainable energy future. Through its Vistra Zero initiative, the company generates zero-carbon electricity to supply green electricity to its customers.
The clean electricity demand from US Data centers and Permian electrification is expected to boost demand by 55 gigawatts (GW) by 2030 from 2023 levels in the geographies the company serves. Vistra has plans to expand its operation and clean energy production volumes through organic and organic initiatives.
Vistra plans to build up to 860 MW of advanced simple-cycle peaker plants to be located in West Texas. Vistra will repower its set to retire coal-fueled Coleto Creek Power Plant with a 600 MW gas-fueled plant. The company will also complete several projects at its existing gas plants that will add more than 500 MW of summer capacity and 100 MW of winter capacity. The company began construction on two of its three Illinois solar and energy storage projects, part of the Coal to Solar and Energy Storage Initiative.
In addition to organic initiatives, the acquisition of Energy Harbor Corporation added nearly 4,000 megawatts (MW) of 24/7 nuclear generation capacity to Vistra’s generation portfolio for addressing the clean energy demand. This acquisition is expected to create recurring annual synergies of $150 million by 2026.
Estimates Moving Up
The Zacks Consensus Estimate for Vistra’s 2024 and 2025 earnings per share has increased 9.4% and 31.9% in the past 60 days, respectively. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.
The Zacks Consensus Estimate for 2024 and 2025 earnings per share of its peer NRG Energy (NRG - Free Report) has moved up by 23.7% and 12%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
Returns Higher Than the Industry
Return on invested capital (ROIC) has outperformed the industry average in the trailing 12 months. ROIC of VST was 5.01% compared with the industry average of 3.4%. The company has been investing effectively in profitable projects, which is evident from its ROIC.
Image Source: Zacks Investment Research
VST’s trailing 12-month return on equity is 24.7%, ahead of the industry average of 9.5%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders’ funds in its operations to generate income.
Image Source: Zacks Investment Research
Boosting Shareholders' Value
Vistra continues to return value to its shareholders through its share repurchase program and dividend payments.
Vistra has repurchased shares worth $3.9 billion from November 2021 through May 3, 2024, resulting in a 28% reduction in outstanding shares from November 2021 levels. The management expects to continue with the buyback of shares and aims to repurchase at least $2.25 billion worth of outstanding shares between 2024 and 2025.
The board has also approved and paid a quarterly dividend of 21.75 cents for the second quarter of 2024, reflecting an increase of 7% from the second quarter of 2023. Check VST’s dividend history here.
Vistra Trading at a Premium
The company is currently valued at a premium compared to its industry on forward 12 months P/E basis.
Image Source: Zacks Investment Research
Conclusion
Vistra operates in an area where the demand for clean electricity is going up. The company is responding to rising demand by adding new clean energy assets to its portfolio. This reliable and affordable clean electricity provider is poised for further upside from current levels.
Given the positive movement in earnings estimates and strong return on capital, Zacks Rank #1 (Strong Buy) Vistra is currently an ideal candidate to add to your portfolio.
You can see the complete list of today’s Zacks #1 Rank stocks here.