Vistra Corp. VST is trading above its 50-day and 200-day simple moving average (SMA), signaling a bullish trend. VST’s shares have gained significantly after the third-quarter earnings beat, and the company is expected to come out with an earnings surprise when it reports fourth-quarter results.

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VST's SMA Chart 50 and 200-day

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The 50-day and 200-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend of the stocks.

The company benefits from strong residential and business results in both Texas and Midwest and Northeast markets. The high availability of its nuclear fleet allowed the company to benefit by catering to the increasing demand in its service territories.

Vistra has outperformed its industry, the Zacks Utilities sector and the S&P 500 in the past year.

Vistra Outperforms Industry, Sector & S&P 500 (One 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.

Rising Demand in VST Stock’s Service Territories

The development of large load data centers and electrification of oil field operations, primarily in the Permian Basin, continue to boost demand for its services. The company also gained from the addition of new residential customers in its service area.

Clean electricity is rising in Vistra’s service area. VST’s ability to produce a high volume of emission-free electricity from its solar, natural gas, nuclear and other alternative energy sources is the primary contributor to its performance.

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 6,400 MW power production capacity from its nuclear fleet, is poised to benefit from the rising demand from data centers.

Another utility, Constellation Energy CEG, with its immense nuclear power-driven electricity generation, is also benefiting from data center-driven clean power demand.

Comprehensive Hedging Program of VST

As of Sept. 30, 2024, Vistra has hedged around 96% for 2025 and about 64% for 2026. Hedging can reduce the impact of potential losses, such as price fluctuations and market changes. The company's comprehensive hedging program supports its guidance range and its 2025 and 2026 Ongoing Operations Adjusted EBITDA guidance.

VST’s Estimates Move Up

The Zacks Consensus Estimate for Vistra’s 2025 earnings per share has increased 8.3% in the last 60 days.

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The consensus mark for the top line for 2025 suggests year-over-year improvements. This reflects analysts' upbeat expectations for the company’s potential and rising demand for clean electricity in its service territories.

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Vistra Raises Shareholder Value

Vistra has bought back shares worth over $4.25 billion from November 2021, resulting in a 29% reduction in outstanding shares from the November 2021 levels. 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.

VST’s board of directors has also approved a quarterly dividend of 22.15 cents for the fourth quarter of 2024, reflecting a sequential increase of 0.9%. Check VST’s dividend history here.

VST Stock’s ROIC Higher Than its Industry

VST’s trailing 12-month return on invested capital (ROIC) is 10.08%, ahead of its industry average of 3.95%. ROIC assesses a company’s efficiency in allocating capital to profitable investments. The ROIC of VST indicates that the company is utilizing its funds more efficiently than its peers.

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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 33.31X. The industry is currently trading at 15.56X.

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

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Final Thoughts on Vistra Stock

Vistra is poised to benefit from rising demand for clean energy in its service territories, courtesy of the development of large data centers and electrification in the Permian Basin region.

VST's strong return on capital, rising earnings estimates and Vistra's management initiatives to increase shareholder value are strong positives for the company.

It is an appropriate time to add this Zacks Rank #1 (Strong Buy) stock, currently carrying a VGM Score of A, to your portfolio. The VGM Score rates each stock on the combined weighted styles, helping identify the ones with the most attractive value, best growth forecast and most promising momentum across the board.

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

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Constellation Energy Corporation (CEG) : Free Stock Analysis Report

Duke Energy Corporation (DUK) : Free Stock Analysis Report

Vistra Corp. (VST) : Free Stock Analysis Report

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