Shares of Vistra Corp. VST have rallied 138.4% in the past 12 months compared with the Zacks Utility- Electric Power industry’s growth of 23.1%, courtesy of its strong retail and commercial operations. In the same time frame, the company also outperformed the Zacks Utilities sector and Zacks S&P 500 Composite’s rally.

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The company benefits from strong residential and business results in both Texas and Midwest and Northeast markets. More than 95% of the commercial availability of its generation assets in the fourth quarter allowed the company to gain by catering to the increasing demand in its service territories.

Courtesy of its high availability of generation assets and steady demand for its services, the company reported stable performance. The ongoing net income of the company was nearly $2.93 billion in 2024, up 95.5% year over year.

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Should you consider adding VST to your portfolio only based on positive price movements? Let’s delve deeper and find out factors that can help investors decide whether it is a good entry point to add VST stock to their portfolio.

Factors Acting as Tailwind for VST Stock

Vistra enjoys the benefit of increasing demand for clean electricity in its service region. The development of large load data centers and electrification of oil field operations, primarily in the Permian Basin, continue boosting demand for its services. Rising demand from semiconductor and industrial customers in VST’s service region is improving demand. The company also gained from the addition of new residential customers in its service area.

Vistra has a comprehensive hedging program provides increased visibility of its long-term earnings. As of Feb. 24, 2025, the company has hedged 100% of expected production for 2025 and 80% of its 2026 expected production volume.

Vistra has been adding clean sources in its generation sources through organic and inorganic means. The company has more than 70 sites with land and interconnects for the future development of clean energy projects. As the demand for clean energy expands, it can explore these lands to develop new projects and meet the rising demand for clean electricity in its service region.

Per a Business Insider report, major tech companies are going to invest nearly $1 trillion in data centers in the next five years. Vistra, with its increasing clean energy volumes, is poised to benefit from the rising demand from data centers. Vistra, with its 41,000 MW of generation capacity powered by a diverse portfolio of natural gas, nuclear, coal, solar and battery energy storage, is well placed to reap the benefits of rising demand for clean energy.

Other utilities, such as Constellation Energy CEG and Dominion Energy D, have a substantial volume of clean energy generation capacity and are also benefiting from data center-driven clean power demand.

VST’s Sales Estimates Move Up

The Zacks Consensus Estimate for Vistra’s 2025 sales reflects year-over-year growth of 19.75%.

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VST Stock’s ROE Higher Than its Industry

VST’s trailing 12-month return on equity (ROE) is 68.31%, way ahead of its industry average of 10.87%. ROE, a profitability measure, reflects how effectively a company is utilizing its shareholders’ funds in its operations to generate income.

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Vistra’s Capital Return Program

Vistra continues to increase shareholders' value through its share repurchase program and dividend payments.

The company bought back shares worth over $4.9 billion from November 2021 through Feb. 24, 2025. VST’s management expects to continue with the buyback of shares and aims to repurchase shares worth $1.9 billion through year-end 2026.

VST’s board of directors has also approved a quarterly dividend of 22.35 cents for the first quarter of 2025 and is targeting an annual dividend payment of $300 million. VST has raised its dividend for 15 times in the past five years. Check VST’s dividend history here.

Vistra Stock Trading at a Premium

Vistra is currently trading at a premium valuation compared to its industry, with its forward 12-month price-to-earnings (P/E) ratio at 19.77X. The industry is currently trading at 14.4X.

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Vistra is currently trading at a premium compared with another operator in the industry having a strong nuclear fleet, Duke Energy Corporation DUK, which has a strong nuclear fleet. The current P/E- F12M ratio of DUK is 18.12X.

Wrapping Up

Vistra continues to enjoy the benefit of rising demand for clean electricity in its service territory. More than 95% commercial availability of its generation assets allows the company to meet rising demand in its service territories.

Vistra's comprehensive hedging program and more than 70 sites with land and interconnects for the future development of clean energy projects will allow it to move toward more clean electricity generation.

The stock is currently trading at a premium, so it is better to remain invested in this Zacks Rank #3 (Hold) stock, enjoy the benefits of dividends and look for a better entry point later.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Vistra Corp. (VST) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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