Vistra Corp. VST is expected to deliver improvements in its top line and its earnings per share when it reports fourth-quarter 2024 results on Feb. 27, before market open.
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
The Zacks Consensus Estimate for VST’s fourth-quarter revenues is pegged at $4.38 billion, indicating an increase of 42.34% from the year-ago reported figure.
The Zacks Consensus Estimate for VST’s fourth-quarter earnings is pegged at $1.59 per share, indicating a whopping 431.25% increase from the year-ago reported figure.
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Vistra’s Positive Earnings Surprise
Vistra surpassed earnings expectations in one of the last four quarters and missed thrice, with the average surprise being 7.05%.
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What the Zacks Model Unveils
Our model does not conclusively predict a likely 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
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Earnings ESP: Vistra has an Earnings ESP of 0.00%.
Zacks Rank: VST currently carries a Zacks Rank #2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Utilities like Constellation Energy Corporation CEG also have nuclear power generation facilities and have surpassed the fourth-quarter Zacks Consensus Estimate by 11.4%.
The Zacks Consensus Estimate for 2025 earnings per share of Constellation Energy has moved up 1.85% in the past 60 days.
Factors Likely to Have Shaped VST’s Q4 Earnings
Vistra’s fourth-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 retirement of traditional coal-fired units is creating a supply gap, and Vistra will benefit from the rising demand for clean energy.
VST benefits from the rising demand from the expanding customer base in its service areas. The company was able to increase its residential customer base organically in the third quarter, and it is expected that the company will add more customers in the fourth quarter, which will create fresh demand for its services.
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 fourth-quarter earnings. The company executed $4.6 billion in share repurchases from November 2021 through Nov. 4, 2024, which lowered outstanding shares and boosted earnings per share. VST’s management expects to continue with the buyback of shares and aims to repurchase at least $3.25 billion worth of outstanding shares between 2024 and 2026.
Vistra utilizes a hedging program to reduce the impact of market changes and price fluctuations, and 100% of its 2024 generation volume is hedged. This extensive hedging has helped to secure its fourth-quarter generation volumes.
Vistra’s operating costs and selling, general and administrative expenses were up 36.4% and 19.3%, respectively, in the first nine months of 2024. The high expenses are expected to have continued in the fourth quarter of 2024 and adversely impacted earnings per share.
VST’s Price Performance
VST’s shares have gained 70% in the past six months compared with the industry’s rally of 2.1%.
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VST Stock Trading at a Premium
Vistra is currently valued at a premium compared to its industry on a forward 12-month P/E basis.
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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 18.19X and 19.76X, respectively.
Investment Thesis
Vistra is increasing its generation capabilities through organic and inorganic initiatives. The company’s integrated business model provides it with a core competitive advantage compared with its non-integrated competitors. The integration of Energy Harbor into VST’s existing operation will create synergies and boost the performance of the company.
Operation of nuclear power generation facilities involves significant risks that could have a material adverse effect on the company’s revenues and results of operations, and VST may not have adequate insurance to cover these risks and hazards.
Wrapping 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.
A stable hedging program and rising residential customer base add to VST’s benefit, given the positive factors investors can think to add this Zacks Rank #2 stock to their portfolio.
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Ameren Corporation (AEE) : Free Stock Analysis Report
Constellation Energy Corporation (CEG) : Free Stock Analysis Report
DTE Energy Company (DTE) : Free Stock Analysis Report
Vistra Corp. (VST) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
