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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 will 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 2023 earnings per share (EPS) has increased 14.9% to $3.54 in the past 90 days.
The consensus mark for 2023 revenues is pegged at $20.29 billion, indicating a year-over-year increase of 47.8%.
Return on Equity (ROE)
ROE indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, Vistra’s ROE is 22.75%, much higher than the industry’s average of 5.41%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
Dividend History
Vistra has been consistently increasing shareholders’ value by paying dividends. In August 2023, the company increased its quarterly dividend by 12% from the year-ago level. The new quarterly dividend is 20.6 cents per share, resulting in an annualized dividend of 82.4 cents. VST’s current dividend yield is 2.59%, better than the Zacks S&P 500 Composite's average of 1.5%.
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 second-quarter 2023 was 4.7, 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 second quarter was 1.17, which, being greater than one, indicates the company’s ability to meet its future short-term liabilities without difficulties.
Investments & Emission Reduction
Vistra has been making systematic capital expenditures to boost its portfolio. It plans to invest $1,722 million in 2023 to further strengthen its operations.
The company is aiming for net-zero emissions by 2050. It currently has 3,750 megawatts (MW) of zero-carbon generation online. It has 10,400 MW fossil generation retired since 2018 and expects to reach 20,000 MW by 2027 (from the 2010 baseline).
Price Performance
In the past three months, VST’s shares have rallied 19.2% against the industry’s average decline of 14.2%.
The Zacks Consensus Estimate for TAC’s 2023 EPS indicates a year-over-year increase of 1,912.5%. The company delivered an average earnings surprise of 107.1% in the last four quarters.
PNW’s long-term (three to five years) earnings growth rate is 6.46%. The consensus estimate for the company’s 2023 sales indicates year-over-year growth of 5.2%.
ALLETE’s long-term earnings growth rate is 8.1%. The consensus estimate for the company’s 2023 EPS indicates a year-over-year increase of 8.6%.
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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 will 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 2023 earnings per share (EPS) has increased 14.9% to $3.54 in the past 90 days.
The consensus mark for 2023 revenues is pegged at $20.29 billion, indicating a year-over-year increase of 47.8%.
Return on Equity (ROE)
ROE indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, Vistra’s ROE is 22.75%, much higher than the industry’s average of 5.41%. This indicates that the company has been utilizing its funds more constructively than its peers in the electric power utility industry.
Dividend History
Vistra has been consistently increasing shareholders’ value by paying dividends. In August 2023, the company increased its quarterly dividend by 12% from the year-ago level. The new quarterly dividend is 20.6 cents per share, resulting in an annualized dividend of 82.4 cents. VST’s current dividend yield is 2.59%, better than the Zacks S&P 500 Composite's average of 1.5%.
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 second-quarter 2023 was 4.7, 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 second quarter was 1.17, which, being greater than one, indicates the company’s ability to meet its future short-term liabilities without difficulties.
Investments & Emission Reduction
Vistra has been making systematic capital expenditures to boost its portfolio. It plans to invest $1,722 million in 2023 to further strengthen its operations.
The company is aiming for net-zero emissions by 2050. It currently has 3,750 megawatts (MW) of zero-carbon generation online. It has 10,400 MW fossil generation retired since 2018 and expects to reach 20,000 MW by 2027 (from the 2010 baseline).
Price Performance
In the past three months, VST’s shares have rallied 19.2% against the industry’s average decline of 14.2%.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are TransAlta (TAC - Free Report) , sporting a Zacks Rank #1, and Pinnacle West Capital Corporation (PNW - Free Report) and ALLETE Inc. (ALE - 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.
The Zacks Consensus Estimate for TAC’s 2023 EPS indicates a year-over-year increase of 1,912.5%. The company delivered an average earnings surprise of 107.1% in the last four quarters.
PNW’s long-term (three to five years) earnings growth rate is 6.46%. The consensus estimate for the company’s 2023 sales indicates year-over-year growth of 5.2%.
ALLETE’s long-term earnings growth rate is 8.1%. The consensus estimate for the company’s 2023 EPS indicates a year-over-year increase of 8.6%.