Vistra Corp. VST is expected to deliver improvements in its top line and a decline in its earnings per share when it reports third-quarter 2024 results on Nov. 7, before market open.
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The Zacks Consensus Estimate for VST’s third-quarter revenues is pegged at $4.96 billion, indicating a 21.4% increase from the year-ago reported figure.
The consensus estimate for earnings is pegged at $1.24 per share. The Zacks Consensus Estimate for VST’s third-quarter earnings has moved down by 31.9% in the past 60 days. The estimate suggests a year-over-year decline of 0.8%.
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Vistra’s Negative Earnings Surprise
Vistra has failed to surpass earnings expectations in the last four quarters, with the reported average negative surprise being 83.33%.
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What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Vistra Energy 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
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Earnings ESP: Vistra has an Earnings ESP of 0.00%.
Zacks Rank: VST currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Have Impacted VST’s Q3 Earnings
Vistra’s operating costs and selling, general and administrative expenses were up 30% and 21.6%, respectively, in the first six months of 2024. The high expenses can adversely impact the third-quarter results of the company, adversely impacting earnings per share.
Vistra’s total debt to capital currently stands at 68.5% compared with its industry average of 60.05%. The acquisition of Energy Harbour Corporation raised the debt level of Vistra Corp. The increase in debt financing expenses might have adversely impacted third-quarter results.
Vistra’s third-quarter earnings are likely to have benefited from the increasing demand for clean electricity in its service area. Increasing demand from the large U.S. data centers and Permian electrification is expected to have been primarily contributing to load growth.
The repurchase of shares has been increasing shareholders' value and boosting earnings per share of the company and is expected to have a positive impact on third-quarter earnings. VST’s 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.
Price Performance & Valuation
VST’s shares have lost 7.1% in the last month compared with the industry’s decline of 0.1%.
VST's Price Performance (1 month)
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The company is currently valued at a premium than its industry on a forward 12-month P/E basis. Vistra is trading at a forward 12-month P/E multiple of 21.11X compared with the industry average of 15.95X.
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Other operators in the space, such as DTE Energy Company DTE and Ameren Corporation AEE, are currently trading at a premium compared with Vistra. The P/E F12 multiple of DTE and AEE is currently 17.28X and 17.99X, respectively.
Investment Thesis
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, an increase in expenses can adversely impact the third-quarter results of the company, adversely impacting earnings per share. In addition, price fluctuations in the wholesale power market and other market factors beyond VST’s control can adversely impact its top line and overall performance.
Summing Up
Vistra operates in a region where demand for clean electricity is rising, and VST is increasing its clean energy generation capability through acquisition and organic means to serve customers and benefit from the same.
Despite its positive traits, investors can currently avoid this Zacks Rank #5 stock, which has a Value Score of D.
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