Avista’s AVA strategic capital expenditures help it improve its transmission and distribution and generation capacity. This should enhance its overall performance. Regulatory approvals for new electric rates help the company boost its top line. Given its growth opportunities, Avista makes for a solid investment option in the utility sector.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.

AVA’s Growth Projections & Surprise History

The Zacks Consensus Estimate for 2025 earnings per share (EPS) has increased 4% to $2.61 in the past 90 days.

The Zacks Consensus Estimate for 2025 sales is pinned at $2 billion, indicating a year-over-year increase of 3.1%.

Avista’s long-term (three to five years) earnings growth rate is 6.07%. The company delivered a trailing four-quarter average earnings surprise of 31.3%.

Debt Position of AVA

Currently, Avista’s total debt to capital is 53.82%, better than the industry’s average of 63.37%.

The time-to-interest earned ratio at the end of the fourth quarter of 2024 was 2.3. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

AVA’s Dividend Growth

The company has been consistently increasing the value of its shareholders through dividends. It expects a dividend CAGR of 3.8% through 2025 (from 2021 baseline). Currently, Avista’s quarterly dividend is 49 cents per share. This represents an annualized dividend of $1.96 per share, up 3.2% from the previous level. The company expects a targeted annual dividend payout ratio of 65-75%. Its current dividend yield is 4.94%, better than the Zacks S&P 500 composite's average of 1.3%.

AVA’s Focus on Systematic Investments

The company expects to invest nearly $2.98 billion during 2025-2029 in infrastructure upgrades. Capital expenditure is expected to be $525 million, $575 million and $600 million in 2025, 2026 and 2027, respectively. Nearly 48% of the total investments during 2025-2027 are for transmission and distribution. Avista expects an annual rate base growth of 5-6% during 2025-2029, driven by its capital expenditures.

AVA’s Share Price Performance

In the past three months, the company has returned 8.3% compared with the industry’s growth of 4%.

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Other Stocks to Consider

A few other top-ranked stocks from the same industry are Ameren Corporation AEE, CMS Energy Corporation CMS and CenterPoint Energy CNP, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AEE’s long-term earnings growth rate is 6.72%. The Zacks Consensus Estimate for 2025 EPS implies an improvement of 6.7% from the bottom line recorded in 2024.

CMS Energy’s long-term earnings growth rate is 7.68%. The Zacks Consensus Estimate for 2025 EPS implies an improvement of 7.8% from the bottom line recorded in 2024.

CenterPoint Energy’s long-term earnings growth rate is 7.49%. The company delivered an average earnings surprise of 0.76% in the last four quarters.

 

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

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