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Vistra Corp. VST is trading at a premium relative to the Zacks Utility Electric Power industry, with a forward 12-month price-to-earnings (P/E) ratio of 20.41X compared to the industry average of 14.28X.
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 allows the company to gain by catering to the increasing demand in its service territories.
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Vistra is currently trading at a premium compared with another industry operator, Duke Energy Corporation DUK, which has a strong nuclear fleet. The current P/E- F12M ratio of DUK is 18.7X.
Courtesy of its high availability of generation assets and steady demand for its services, the company reported stable performance, which is reflected in its share prices. The company’s shares have outperformed the industry’s rally in the past year.
Price Performance (One Year)
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Should you consider adding VST to your portfolio only based on positive price movements, ignoring its premium valuation? Let’s delve deeper and find out the factors that can help investors decide whether it is a good entry point to add VST stock to their portfolio.
Factors Contributing Toward VST Stock’s Performance
Vistra stands to gain from the rising demand for clean electricity within its service region. This growth is fueled by the rapid development of large-scale data centers and the ongoing electrification of oil field operations in the Permian Basin. In addition, increasing power needs from semiconductor manufacturers, industrial clients, and a growing residential customer base are further driving demand for the company’s services.
Vistra is steadily growing its clean energy portfolio through a combination of organic development and strategic acquisitions. The company has secured over 70 sites with available land and grid interconnections, designated for future renewable energy projects. These resources provide Vistra with a strong foundation to meet the rising demand for clean power across its service regions.
Vistra’s strong hedging strategy significantly improves the visibility of its future earnings. As of Feb. 24, 2025, the company has fully hedged its projected production for the year and covered 80% of its expected output for 2026. This proactive approach enhances financial stability and reduces exposure to market fluctuations.
A Business Insider report projects that leading technology companies will invest close to $1 trillion in data centers over the next five years. Vistra, with its diversified generation capacity of 41,000 MW, which includes natural gas, nuclear, coal, solar, and battery storage, is well-positioned to support this rising energy demand and seize new growth opportunities.