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Vistra to Acquire Full Equity Interests of Vistra Vision: Time to Buy?
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Vistra Corp. (VST - Free Report) announced that it would acquire its remaining 15% interest in Vistra Vision LLC from the affiliates of Nuveen Asset Management, LLC, and Avenue Capital Management II, L.P. The completion of the deal will make Vistra the complete owner of its Vistra Vision subsidiary, which includes its zero-carbon nuclear, energy storage and solar generation assets, as well as its retail business.
Courtesy of this positive development, Vistra’s shares have risen 1.7% in the intra-day trading and rallied 142.2% in the year-to-date period, outperforming its industry.
Vistra Stock Outperforms Industry YTD
Image Source: Zacks Investment Research
VST shares have been trading above the 50-day moving average, indicating a bullish trend.
Image Source: Zacks Investment Research
How VST Stock Will Gain From Full Ownership of Vistra Vision
The clear transition is evident in the Zacks Utilities sector, and utility operators are looking for new avenues to increase their clean electricity generation assets and lower emissions. Vistra’s decision to acquire the remaining interest in Vistra Vision is in sync with this aforesaid objective. This deal will provide Vistra with 100% ownership of highly valuable, carbon-free assets in the key growing markets across the United States.
Vistra Vision was formed in 2023, combining Energy Harbor's nuclear and retail businesses with Vistra's nuclear and retail businesses and Vistra Zero renewables and storage projects. Vistra Vision has 6,400 megawatts (MW) of nuclear generation and nearly 2,400 MW of online and near-term pipeline of renewable and storage assets. Vistra Vision serves nearly five million retail customers across the United States. The deal is expected to close on Dec. 31, 2024 and allow Vistra to control entire clean generation and cater to the increasing clean power demand in the United States.
Contributions from Vistra Vision’s existing assets will make this deal immediately accretive to the shareholders of Vistra. The pipeline renewable projects of Vistra Vision will contribute toward the company’s benefit over the long term.
Vistra will acquire the 15% equity interest collectively owned by Nuveen and Avenue for a purchase price of $3.248 billion in cash, which will paid in five annual installments. The net present value of the purchase price as of Dec. 31, 2024, discounted at a 6% interest rate, is $3.085 billion, adding to Vistra’s benefits from this transaction.
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. Another utility, Constellation Energy (CEG - Free Report) , with its immense nuclear power-driven electricity generation, is also benefiting from data center-driven clean power demand.
Vistra Increases Shareholder Value
This acquisition will not change Vistra’s goal to increase its shareholders' value through its share repurchase program and dividend payments.
Vistra continues to expect to execute at least $2.25 billion of share repurchases in 2024 and 2025 and at least $1 billion in 2026.
Vistra also plans to pay $300 million in aggregate common dividends each year from 2024 to 2026. Check VST’s dividend history here.
VST’s Earnings Estimates Move Up
The Zacks Consensus Estimates for Vistra’s 2024 and 2025 earnings per share imply year-over-year growth of 16.4% and 50.6%, respectively. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.
This deal is expected to boost VST’s earnings per share as the rising demand for clean energy will result from strong contributions from the acquired Vistra Vision assets.
Image Source: Zacks Investment Research
Vistra’s ROIC Higher Than Its Industry
Return on invested capital (ROIC) has outperformed the industry average in the trailing 12 months. Vistra’s ROIC was 4.96% compared with the industry average of 3.54%. The company has been investing effectively in profitable projects, which is evident from its ROIC.
Image Source: Zacks Investment Research
VST Stock Trades at a Discount
Vistra is currently trading at a discount compared with its industry on a forward 12-month P/E basis.
Image Source: Zacks Investment Research
Final Thoughts on Vistra
Vistra’s decision to acquire the entire ownership of Vistra Vision is definitely a smart move, given the rising demand for clean energy from large data centers and electrification in the Permian Basin region.
With the contribution from the entire Vistra Vision assets, rising earnings estimates and Vistra management’s initiatives to increase shareholder value and discounted valuation, it is an appropriate time to add this Zacks Rank #2 (Buy) stock to your portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Vistra Corp. (VST - Free Report) announced that it would acquire its remaining 15% interest in Vistra Vision LLC from the affiliates of Nuveen Asset Management, LLC, and Avenue Capital Management II, L.P. The completion of the deal will make Vistra the complete owner of its Vistra Vision subsidiary, which includes its zero-carbon nuclear, energy storage and solar generation assets, as well as its retail business.
Courtesy of this positive development, Vistra’s shares have risen 1.7% in the intra-day trading and rallied 142.2% in the year-to-date period, outperforming its industry.
Vistra Stock Outperforms Industry YTD
Image Source: Zacks Investment Research
VST shares have been trading above the 50-day moving average, indicating a bullish trend.
Image Source: Zacks Investment Research
How VST Stock Will Gain From Full Ownership of Vistra Vision
The clear transition is evident in the Zacks Utilities sector, and utility operators are looking for new avenues to increase their clean electricity generation assets and lower emissions. Vistra’s decision to acquire the remaining interest in Vistra Vision is in sync with this aforesaid objective. This deal will provide Vistra with 100% ownership of highly valuable, carbon-free assets in the key growing markets across the United States.
Vistra Vision was formed in 2023, combining Energy Harbor's nuclear and retail businesses with Vistra's nuclear and retail businesses and Vistra Zero renewables and storage projects. Vistra Vision has 6,400 megawatts (MW) of nuclear generation and nearly 2,400 MW of online and near-term pipeline of renewable and storage assets. Vistra Vision serves nearly five million retail customers across the United States. The deal is expected to close on Dec. 31, 2024 and allow Vistra to control entire clean generation and cater to the increasing clean power demand in the United States.
Contributions from Vistra Vision’s existing assets will make this deal immediately accretive to the shareholders of Vistra. The pipeline renewable projects of Vistra Vision will contribute toward the company’s benefit over the long term.
Vistra will acquire the 15% equity interest collectively owned by Nuveen and Avenue for a purchase price of $3.248 billion in cash, which will paid in five annual installments. The net present value of the purchase price as of Dec. 31, 2024, discounted at a 6% interest rate, is $3.085 billion, adding to Vistra’s benefits from this transaction.
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. Another utility, Constellation Energy (CEG - Free Report) , with its immense nuclear power-driven electricity generation, is also benefiting from data center-driven clean power demand.
Vistra Increases Shareholder Value
This acquisition will not change Vistra’s goal to increase its shareholders' value through its share repurchase program and dividend payments.
Vistra continues to expect to execute at least $2.25 billion of share repurchases in 2024 and 2025 and at least $1 billion in 2026.
Vistra also plans to pay $300 million in aggregate common dividends each year from 2024 to 2026. Check VST’s dividend history here.
VST’s Earnings Estimates Move Up
The Zacks Consensus Estimates for Vistra’s 2024 and 2025 earnings per share imply year-over-year growth of 16.4% and 50.6%, respectively. The upward revision in earnings estimates indicates analysts’ increasing confidence in the stock.
This deal is expected to boost VST’s earnings per share as the rising demand for clean energy will result from strong contributions from the acquired Vistra Vision assets.
Image Source: Zacks Investment Research
Vistra’s ROIC Higher Than Its Industry
Return on invested capital (ROIC) has outperformed the industry average in the trailing 12 months. Vistra’s ROIC was 4.96% compared with the industry average of 3.54%. The company has been investing effectively in profitable projects, which is evident from its ROIC.
Image Source: Zacks Investment Research
VST Stock Trades at a Discount
Vistra is currently trading at a discount compared with its industry on a forward 12-month P/E basis.
Image Source: Zacks Investment Research
Final Thoughts on Vistra
Vistra’s decision to acquire the entire ownership of Vistra Vision is definitely a smart move, given the rising demand for clean energy from large data centers and electrification in the Permian Basin region.
With the contribution from the entire Vistra Vision assets, rising earnings estimates and Vistra management’s initiatives to increase shareholder value and discounted valuation, it is an appropriate time to add this Zacks Rank #2 (Buy) stock to your portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.