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VST or IDA: Which is a Better Utility Electric Power Stock?
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Utilities have been benefiting from various favorable factors, such as new electric rates, customer additions, cost management and the implementation of energy-efficiency programs. Also, the investments to improve the resiliency of electric infrastructure against extreme weather conditions and the transition to cost-effective, renewable energy sources to produce electricity aid the power industry.
Except in the case of any major weather variation, demand for the services provided by utilities remains more or less steady, regardless of economic cycles. The decline in demand in 2023 was primarily due to milder temperatures in the first half of the year. Despite the expected reduction in usage, utilities will continue to benefit from the rise in residential electricity rates.
A clear transition is evident in this industry, with more companies declaring zero-emission goals. Research and development over the years have resulted in a substantial decline in the cost of setting up utility-scale renewable power projects, aiding in reducing emissions. Per the U.S. Energy Information Administration (EIA), U.S. energy-related carbon emissions are expected to decrease 3% in 2023. Most of this reduction in emissions is due to less use of coal, with coal-related carbon emissions declining 18% from the 2022 level. Per the same report, the annual share of U.S. electricity generation from renewable energy sources will rise 22% and 24% in 2023 and 2024, respectively.
We have run a comparative analysis on two Zacks Utility— Electric Power companies — Vistra Corp. (VST - Free Report) and IDACORP, Inc. (IDA - Free Report) — to decide which one is a better pick for your portfolio.
While Vistra has a market capitalization of $13.5 billion, IDACORP has $4.96 billion.
Growth Projections
The Zacks Consensus Estimate for VST’s 2023 earnings is pinned at $3.79 per share on revenues of $20.14 billion. This implies year-over-year bottom-line increase of 228.9% and top-line growth of 46.7%.
The consensus mark for IDA’s 2023 earnings is pegged at $5.12 per share on revenues of $1.78 billion. This indicates year-over-year bottom-line growth of 0.2% and a top-line increase of 8.5%.
Price Performance
In the past three months, shares of VST have risen 14.1% against the industry's decline of 4.5%. Shares of IDA have risen 0.4% in the same time frame.
Image Source: Zacks Investment Research
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. The current ROE for Vistra and IDACORP is 17.79% and 9.51%, respectively, compared with the industry’s 6.99%.
Debt Position
The debt-to-capital ratio is a vital indicator of the financial position of a company. It shows the amount of debt used to run a business. Currently, Vistra and IDACORP have a debt-to-capital of 71.27% and 49.11%, respectively, compared with the industry’s 61.19%.
The times interest earned (TIE) ratio for VST is 3.9, and that for IDA is 3.5. Since both companies have a TIE ratio exceeding one, it indicates that they have enough financial flexibility to meet their near-term interest obligations.
Dividend Yield
Utility companies generally distribute dividends and increase shareholders’ value. Currently, the dividend yield for Vistra is 2.18% and that for IDACORP is 3.39%. The dividend yields of these companies are better than the Zacks S&P 500 Composite’s average of 1.39%.
VGM Score
Picking the best Zacks Rank Stocks just got easier and more profitable with the Zacks Style Scores or a VGM Score. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows investors to eliminate the negative aspects of the stocks and select the winners. Here, VST has a VGM Score of D and IDA holds a VGM Score of D.
Outcome
Both Vistra and IDACORP are evenly matched and good picks for your portfolio. They have the potential to improve from their current position and serve the needs of their growing customer base. However, the above comparisons and a strong VGM Score place VST ahead of IDA.
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VST or IDA: Which is a Better Utility Electric Power Stock?
Utilities have been benefiting from various favorable factors, such as new electric rates, customer additions, cost management and the implementation of energy-efficiency programs. Also, the investments to improve the resiliency of electric infrastructure against extreme weather conditions and the transition to cost-effective, renewable energy sources to produce electricity aid the power industry.
Except in the case of any major weather variation, demand for the services provided by utilities remains more or less steady, regardless of economic cycles. The decline in demand in 2023 was primarily due to milder temperatures in the first half of the year. Despite the expected reduction in usage, utilities will continue to benefit from the rise in residential electricity rates.
A clear transition is evident in this industry, with more companies declaring zero-emission goals. Research and development over the years have resulted in a substantial decline in the cost of setting up utility-scale renewable power projects, aiding in reducing emissions. Per the U.S. Energy Information Administration (EIA), U.S. energy-related carbon emissions are expected to decrease 3% in 2023. Most of this reduction in emissions is due to less use of coal, with coal-related carbon emissions declining 18% from the 2022 level. Per the same report, the annual share of U.S. electricity generation from renewable energy sources will rise 22% and 24% in 2023 and 2024, respectively.
We have run a comparative analysis on two Zacks Utility— Electric Power companies — Vistra Corp. (VST - Free Report) and IDACORP, Inc. (IDA - Free Report) — to decide which one is a better pick for your portfolio.
Both companies carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While Vistra has a market capitalization of $13.5 billion, IDACORP has $4.96 billion.
Growth Projections
The Zacks Consensus Estimate for VST’s 2023 earnings is pinned at $3.79 per share on revenues of $20.14 billion. This implies year-over-year bottom-line increase of 228.9% and top-line growth of 46.7%.
The consensus mark for IDA’s 2023 earnings is pegged at $5.12 per share on revenues of $1.78 billion. This indicates year-over-year bottom-line growth of 0.2% and a top-line increase of 8.5%.
Price Performance
In the past three months, shares of VST have risen 14.1% against the industry's decline of 4.5%. Shares of IDA have risen 0.4% in the same time frame.
Image Source: Zacks Investment Research
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. The current ROE for Vistra and IDACORP is 17.79% and 9.51%, respectively, compared with the industry’s 6.99%.
Debt Position
The debt-to-capital ratio is a vital indicator of the financial position of a company. It shows the amount of debt used to run a business. Currently, Vistra and IDACORP have a debt-to-capital of 71.27% and 49.11%, respectively, compared with the industry’s 61.19%.
The times interest earned (TIE) ratio for VST is 3.9, and that for IDA is 3.5. Since both companies have a TIE ratio exceeding one, it indicates that they have enough financial flexibility to meet their near-term interest obligations.
Dividend Yield
Utility companies generally distribute dividends and increase shareholders’ value. Currently, the dividend yield for Vistra is 2.18% and that for IDACORP is 3.39%. The dividend yields of these companies are better than the Zacks S&P 500 Composite’s average of 1.39%.
VGM Score
Picking the best Zacks Rank Stocks just got easier and more profitable with the Zacks Style Scores or a VGM Score. Here V stands for Value, G for Growth and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows investors to eliminate the negative aspects of the stocks and select the winners. Here, VST has a VGM Score of D and IDA holds a VGM Score of D.
Outcome
Both Vistra and IDACORP are evenly matched and good picks for your portfolio. They have the potential to improve from their current position and serve the needs of their growing customer base. However, the above comparisons and a strong VGM Score place VST ahead of IDA.