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VST or SO: Which Utility Stock Offers Stronger Growth Potential?
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Key Takeaways
SO emerges as the stronger utility pick, backed by lower debt, higher dividends and reduced volatility.
VST trades at a forward P/E of 13.74X versus SO's 18.83X, offering a more attractive valuation.
SO's 3.32% dividend yield, 17.08% net margin and 13.3% monthly stock gain beat VST's corresponding metrics.
The companies operating in the Zacks Utility -Electric Power industry offer compelling long-term investment opportunities, backed by a highly regulated operating environment that supports predictable cash flows and stable returns. Most utilities primarily serve domestic markets, benefiting from rate-based growth fueled by continued investments in infrastructure upgrades, grid modernization and system reliability. The industry's regulated business model provides a degree of protection against economic volatility, making utility stocks attractive to income-seeking and defensive investors.
The industry is also undergoing a major transformation as utilities accelerate their transition toward cleaner energy sources. Nuclear energy contributes nearly 20% of the total power produced in the United States. Both Vistra Corp. (VST - Free Report) and The Southern Company (SO - Free Report) have exposure in nuclear energy. Companies are reducing carbon emissions by retiring coal-fired power plants, expanding renewable energy capacity and strengthening transmission networks to accommodate growing wind and solar generation. Meanwhile, nuclear power is regaining prominence as a reliable, carbon-free source of baseload electricity that complements intermittent renewable energy. Additionally, rising electricity consumption driven by the rapid expansion of AI-powered data centers, industrial reshoring and increasing electric vehicle adoption is creating new growth opportunities for utilities, supporting long-term capital investments and future earnings potential.
Vistra offers compelling long-term investment potential, supported by its integrated business model, diversified generation portfolio and growing exposure to rising electricity demand. The company’s 43,641 MW generation capacity, spanning natural gas, nuclear, coal, solar and battery storage, provides operational flexibility, enhances grid reliability and reduces dependence on individual fuel sources. Strategic investments in renewable energy, storage and retail operations, along with reliable nuclear fleet performance, position Vistra to capitalize on expanding electricity consumption and the transition toward cleaner energy.
Vistra’s disciplined risk management and hedging strategies further strengthen its investment appeal by enhancing earnings visibility and cash flow stability. As of Aug. 3, 2026, the company had hedged approximately 100%, 94% and 72% of its expected generation volumes for 2026, 2027 and 2028, respectively. Additionally, its 20-year, 207 MW power purchase agreement with New Era Energy & Digital provides exposure to growing AI-driven data center demand, supporting sustained earnings growth and long-term shareholder value. The company provides power to around 4 million customers.
The Southern Company offers attractive long-term investment potential, supported by its regulated business model, stable earnings and expanding electricity demand across the southeastern United States. Its vertically integrated operations, recurring customer demand and predictable rate structures provide earnings stability and support sustained growth. Rising power consumption from data centers and large commercial customers is creating significant opportunities. With more than 17 gigawatts of contracted demand expected by the mid-2030s and a robust development pipeline, the company is well positioned to benefit from increasing electricity sales and continued rate-base expansion.
The Southern Company's strategic investments in generation, transmission and energy storage further strengthen its growth outlook. Regulatory approval for 10 gigawatts of company-owned generation, along with substantial transmission expansion, provides a strong foundation for future infrastructure investments. Ongoing investments in natural gas, solar and battery storage enhance system reliability while addressing rising electricity requirements. These initiatives are expected to drive steady earnings growth, strengthen cash flows and create long-term shareholder value. The company provides electricity and natural gas to nearly 9 million customers.
As both companies hold strong positions in the utility sector, examining their core fundamentals is essential. A focused comparison can clarify which one presents the more compelling investment opportunity.
VST & SO’s Earnings Growth Projections
The Zacks Consensus Estimate for Vistra’s earnings per share in 2026 indicates a decline of 0.87% in the past 60 days and the same for 2027 moved up 0.57% in the same time period.
Image Source: Zacks Investment Research
The consensus estimate for The Southern Company’s earnings per share for 2026 and 2027 remained unchanged in the past 60 days. Long-term (three to five years) earnings growth per share is pegged at 8.28%.
Image Source: Zacks Investment Research
Debt to Capital
The Utility industry is capital-intensive, and it requires large investments at regular intervals to upgrade, maintain and expand operations. The use of new evolving technology also requires investments. Therefore, utilities borrow from the market and add it to the internal cash generation to fund the long-term investments. Rising interest rates will increase the capital financing expenses of the utilities.
Vistra’s debt-to-capital currently stands at 78.1% compared with The Southern Company’s 64.09%. It appears SO is utilizing a lower percentage of debt compared with VST to run its operations.
Image Source: Zacks Investment Research
VST and SO’s Valuation
The Southern Company currently appears to be trading at a premium compared with Vistra on a Price/Earnings Forward 12-month basis. (P/E- F12M).
VST is currently trading at 13.74X compared with SO's 18.83X.
Image Source: Zacks Investment Research
VST & SO’s Dividend Yield
Electricity producers typically generate stable revenues and predictable cash flows, allowing management to forecast earnings with greater certainty and sustain consistent dividend payments to shareholders over the long term.
The current dividend yield of Vistra is 0.6% and it has raised dividends 19 times in the past five years. The same for The Southern Company is 3.32% and it has also raised dividends five times in the past five years.
Volatility of the Stock
Beta measures a stock’s volatility relative to the broader market and indicates its level of market-related risk. Generally, a higher beta signals greater volatility and risk. A beta above 1 means the stock tends to experience greater price volatility than the broader market, with larger swings in both directions.
The Southern Company’s beta is currently pegged at 0.3 compared with Vistra’s 1.38.
Net Profit Margin
Net profit margin measures how efficiently a company converts revenues into profit after all expenses, offering insight into its overall profitability and financial health. The Southern Company’s net margin is 17.08% compared with Vistra’s 16.31%.
Image Source: Zacks Investment Research
Price Performance
In the past month, Vistra’s shares have risen 0.4% compared with The Southern Company’s rally of 13.3%.
Price Performance (One month)
Image Source: Zacks Investment Research
Wrapping Up
Vistra and The Southern Company are generating substantial volumes of clean energy while efficiently serving millions of customers across their respective service territories.
Although Vistra currently trades at a more attractive valuation, several key financial metrics favor The Southern Company. Its lower reliance on debt, higher dividend yield, reduced volatility, stronger net profit margin and superior share price performance make SO a more compelling investment choice in the utility sector.
Even though both companies currently have a Zacks Rank #3 (Hold), at present The Southern Company shows better potential than Vistra.
View the Zacks #1 Rank List
Image: Bigstock
VST or SO: Which Utility Stock Offers Stronger Growth Potential?
Key Takeaways
The companies operating in the Zacks Utility -Electric Power industry offer compelling long-term investment opportunities, backed by a highly regulated operating environment that supports predictable cash flows and stable returns. Most utilities primarily serve domestic markets, benefiting from rate-based growth fueled by continued investments in infrastructure upgrades, grid modernization and system reliability. The industry's regulated business model provides a degree of protection against economic volatility, making utility stocks attractive to income-seeking and defensive investors.
The industry is also undergoing a major transformation as utilities accelerate their transition toward cleaner energy sources. Nuclear energy contributes nearly 20% of the total power produced in the United States. Both Vistra Corp. (VST - Free Report) and The Southern Company (SO - Free Report) have exposure in nuclear energy. Companies are reducing carbon emissions by retiring coal-fired power plants, expanding renewable energy capacity and strengthening transmission networks to accommodate growing wind and solar generation. Meanwhile, nuclear power is regaining prominence as a reliable, carbon-free source of baseload electricity that complements intermittent renewable energy. Additionally, rising electricity consumption driven by the rapid expansion of AI-powered data centers, industrial reshoring and increasing electric vehicle adoption is creating new growth opportunities for utilities, supporting long-term capital investments and future earnings potential.
Vistra offers compelling long-term investment potential, supported by its integrated business model, diversified generation portfolio and growing exposure to rising electricity demand. The company’s 43,641 MW generation capacity, spanning natural gas, nuclear, coal, solar and battery storage, provides operational flexibility, enhances grid reliability and reduces dependence on individual fuel sources. Strategic investments in renewable energy, storage and retail operations, along with reliable nuclear fleet performance, position Vistra to capitalize on expanding electricity consumption and the transition toward cleaner energy.
Vistra’s disciplined risk management and hedging strategies further strengthen its investment appeal by enhancing earnings visibility and cash flow stability. As of Aug. 3, 2026, the company had hedged approximately 100%, 94% and 72% of its expected generation volumes for 2026, 2027 and 2028, respectively. Additionally, its 20-year, 207 MW power purchase agreement with New Era Energy & Digital provides exposure to growing AI-driven data center demand, supporting sustained earnings growth and long-term shareholder value. The company provides power to around 4 million customers.
The Southern Company offers attractive long-term investment potential, supported by its regulated business model, stable earnings and expanding electricity demand across the southeastern United States. Its vertically integrated operations, recurring customer demand and predictable rate structures provide earnings stability and support sustained growth. Rising power consumption from data centers and large commercial customers is creating significant opportunities. With more than 17 gigawatts of contracted demand expected by the mid-2030s and a robust development pipeline, the company is well positioned to benefit from increasing electricity sales and continued rate-base expansion.
The Southern Company's strategic investments in generation, transmission and energy storage further strengthen its growth outlook. Regulatory approval for 10 gigawatts of company-owned generation, along with substantial transmission expansion, provides a strong foundation for future infrastructure investments. Ongoing investments in natural gas, solar and battery storage enhance system reliability while addressing rising electricity requirements. These initiatives are expected to drive steady earnings growth, strengthen cash flows and create long-term shareholder value. The company provides electricity and natural gas to nearly 9 million customers.
As both companies hold strong positions in the utility sector, examining their core fundamentals is essential. A focused comparison can clarify which one presents the more compelling investment opportunity.
VST & SO’s Earnings Growth Projections
The Zacks Consensus Estimate for Vistra’s earnings per share in 2026 indicates a decline of 0.87% in the past 60 days and the same for 2027 moved up 0.57% in the same time period.
Image Source: Zacks Investment Research
The consensus estimate for The Southern Company’s earnings per share for 2026 and 2027 remained unchanged in the past 60 days. Long-term (three to five years) earnings growth per share is pegged at 8.28%.
Image Source: Zacks Investment Research
Debt to Capital
The Utility industry is capital-intensive, and it requires large investments at regular intervals to upgrade, maintain and expand operations. The use of new evolving technology also requires investments. Therefore, utilities borrow from the market and add it to the internal cash generation to fund the long-term investments. Rising interest rates will increase the capital financing expenses of the utilities.
Vistra’s debt-to-capital currently stands at 78.1% compared with The Southern Company’s 64.09%. It appears SO is utilizing a lower percentage of debt compared with VST to run its operations.
Image Source: Zacks Investment Research
VST and SO’s Valuation
The Southern Company currently appears to be trading at a premium compared with Vistra on a Price/Earnings Forward 12-month basis. (P/E- F12M).
VST is currently trading at 13.74X compared with SO's 18.83X.
Image Source: Zacks Investment Research
VST & SO’s Dividend Yield
Electricity producers typically generate stable revenues and predictable cash flows, allowing management to forecast earnings with greater certainty and sustain consistent dividend payments to shareholders over the long term.
The current dividend yield of Vistra is 0.6% and it has raised dividends 19 times in the past five years. The same for The Southern Company is 3.32% and it has also raised dividends five times in the past five years.
Volatility of the Stock
Beta measures a stock’s volatility relative to the broader market and indicates its level of market-related risk. Generally, a higher beta signals greater volatility and risk. A beta above 1 means the stock tends to experience greater price volatility than the broader market, with larger swings in both directions.
The Southern Company’s beta is currently pegged at 0.3 compared with Vistra’s 1.38.
Net Profit Margin
Net profit margin measures how efficiently a company converts revenues into profit after all expenses, offering insight into its overall profitability and financial health.
The Southern Company’s net margin is 17.08% compared with Vistra’s 16.31%.
Image Source: Zacks Investment Research
Price Performance
In the past month, Vistra’s shares have risen 0.4% compared with The Southern Company’s rally of 13.3%.
Price Performance (One month)
Image Source: Zacks Investment Research
Wrapping Up
Vistra and The Southern Company are generating substantial volumes of clean energy while efficiently serving millions of customers across their respective service territories.
Although Vistra currently trades at a more attractive valuation, several key financial metrics favor The Southern Company. Its lower reliance on debt, higher dividend yield, reduced volatility, stronger net profit margin and superior share price performance make SO a more compelling investment choice in the utility sector.
Even though both companies currently have a Zacks Rank #3 (Hold), at present The Southern Company shows better potential than Vistra.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.