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Vistra (VST) Pre-Q2 Earnings Analysis: Should You Buy or Hold?
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Vistra Corp. (VST - Free Report) is expected to deliver improvements in its top and bottom lines when it reports second-quarter 2024 results on Aug 8, before market open.
The Zacks Consensus Estimate for VST’s second-quarter revenues is pegged at $4.04 billion, indicating a 26.7% increase from the year-ago reported figure.
The consensus estimate for earnings is pegged at $1.59 per share. The Zacks Consensus Estimate for VST’s second-quarter earnings has moved up 93.9% in the past 60 days. The estimate suggests year-over-year growth of 54.4%.
Image Source: Zacks Investment Research
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Vistra this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you can see below.
Vistra’s second-quarter earnings are likely to have benefited from the increasing demand for clean electricity in its service area. The company’s ability to produce a high volume of emission-free electricity from its solar, natural gas, nuclear and other alternative energy sources, and meet the rising demand from its customers is likely to have been the primary contributor to its performance.
Increasing demand from the large U.S. data centers and Permian electrification are expected to have been primarily contributing to load growth. Organic customer growth across its Texas and Midwest / Northeast retail markets has been boosting the demand for its services, thereby driving earnings.
In the second quarter, Vistra enjoyed the benefit of a full quarter’s contribution from its Energy Harbor Corp. acquisition, which is likely to have had a positive impact on VST’s quarterly earnings per share.
The repurchase of shares has been increasing shareholders' value and boosting earnings per share of the company. Since the announcement of the share repurchase program in November 2021, Vistra has reduced its outstanding shares by 28% through buyback.
Price Performance & Valuation
VST’s shares have gained 94.3% year to date compared with the industry’s rally of 11%.
Price Performance (YTD)
Image Source: Zacks Investment Research
The company is currently valued at a discount than its industry on a forward 12-month P/E basis. Vistra is trading at a forward 12-month P/E multiple of 12.68 compared with the industry average of 13.87.
Image Source: Zacks Investment Research
Other operators in the space, such as FirstEnergy (FE - Free Report) and American Electric Power Co. Inc. (AEP - Free Report) , are currently trading at a premium compared with Vistra. The P/E F12 multiple of FE and EPD is currently 14.96 and 16.94, respectively.
Investment Thesis
Vistra has continuously been 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.
As part of the clean energy transition process, VST started the construction of two Illinois solar and energy storage projects, part of the Coal to Solar and Energy Storage Initiative. This clean energy initiative is going to boost the company’s performance and earnings over the long term.
Vistra is increasing its generation capabilities through organic and inorganic initiatives. The acquisition of Energy Harbor Corporation is expected to create recurring annual synergies of $150 million by 2026.
However, volatile power supply costs, price fluctuations in the wholesale power market and other market factors beyond VST’s control can adversely impact its top line and overall performance.
To Sum Up
Vistra has been gaining from increasing demand for clean electricity from its expanding customer base. Contributions from the acquired Energy Harbor assets are likely to have boosted VST’s second-quarter 2024 earnings. Ongoing repurchases of shares are also expected to have had positive impacts on earnings.
Given the improvement in the company’s earnings estimates, it will be wise to remain invested in this utility at this moment.
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Vistra (VST) Pre-Q2 Earnings Analysis: Should You Buy or Hold?
Vistra Corp. (VST - Free Report) is expected to deliver improvements in its top and bottom lines when it reports second-quarter 2024 results on Aug 8, before market open.
The Zacks Consensus Estimate for VST’s second-quarter revenues is pegged at $4.04 billion, indicating a 26.7% increase from the year-ago reported figure.
The consensus estimate for earnings is pegged at $1.59 per share. The Zacks Consensus Estimate for VST’s second-quarter earnings has moved up 93.9% in the past 60 days. The estimate suggests year-over-year growth of 54.4%.
Image Source: Zacks Investment Research
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Vistra this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you can see below.
Vistra Corp. Price and EPS Surprise
Vistra Corp. price-eps-surprise | Vistra Corp. Quote
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: Vistra has an Earnings ESP of 0.00%.
Zacks Rank: VST currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Have Shaped VST’s Q2 Earnings
Vistra’s second-quarter earnings are likely to have benefited from the increasing demand for clean electricity in its service area. The company’s ability to produce a high volume of emission-free electricity from its solar, natural gas, nuclear and other alternative energy sources, and meet the rising demand from its customers is likely to have been the primary contributor to its performance.
Increasing demand from the large U.S. data centers and Permian electrification are expected to have been primarily contributing to load growth. Organic customer growth across its Texas and Midwest / Northeast retail markets has been boosting the demand for its services, thereby driving earnings.
In the second quarter, Vistra enjoyed the benefit of a full quarter’s contribution from its Energy Harbor Corp. acquisition, which is likely to have had a positive impact on VST’s quarterly earnings per share.
The repurchase of shares has been increasing shareholders' value and boosting earnings per share of the company. Since the announcement of the share repurchase program in November 2021, Vistra has reduced its outstanding shares by 28% through buyback.
Price Performance & Valuation
VST’s shares have gained 94.3% year to date compared with the industry’s rally of 11%.
Price Performance (YTD)
Image Source: Zacks Investment Research
The company is currently valued at a discount than its industry on a forward 12-month P/E basis. Vistra is trading at a forward 12-month P/E multiple of 12.68 compared with the industry average of 13.87.
Image Source: Zacks Investment Research
Other operators in the space, such as FirstEnergy (FE - Free Report) and American Electric Power Co. Inc. (AEP - Free Report) , are currently trading at a premium compared with Vistra. The P/E F12 multiple of FE and EPD is currently 14.96 and 16.94, respectively.
Investment Thesis
Vistra has continuously been 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.
As part of the clean energy transition process, VST started the construction of two Illinois solar and energy storage projects, part of the Coal to Solar and Energy Storage Initiative. This clean energy initiative is going to boost the company’s performance and earnings over the long term.
Vistra is increasing its generation capabilities through organic and inorganic initiatives. The acquisition of Energy Harbor Corporation is expected to create recurring annual synergies of $150 million by 2026.
However, volatile power supply costs, price fluctuations in the wholesale power market and other market factors beyond VST’s control can adversely impact its top line and overall performance.
To Sum Up
Vistra has been gaining from increasing demand for clean electricity from its expanding customer base. Contributions from the acquired Energy Harbor assets are likely to have boosted VST’s second-quarter 2024 earnings. Ongoing repurchases of shares are also expected to have had positive impacts on earnings.
Given the improvement in the company’s earnings estimates, it will be wise to remain invested in this utility at this moment.