Long-established in the Utilities - Independent Power Producers industry, Vistra Corp (VST, Financial) has built a stellar reputation over the years. Recently, the company experienced a notable daily gain of 2.51%, alongside a three-month change of 27.25%. Despite these gains, the latest insights from the GF Score suggest potential challenges ahead. Key metrics such as financial strength, growth, and valuation indicate that Vistra Corp may struggle to maintain its historical performance levels. This article delves into these critical factors to uncover the evolving narrative of Vistra Corp.
What Is the GF Score?
The GF Score is a proprietary stock performance ranking system developed by GuruFocus. It evaluates stocks based on five key aspects: financial strength, profitability, growth, valuation, and momentum. These aspects have been closely correlated with long-term stock performance from 2006 to 2021. Stocks with higher GF Scores typically yield higher returns. Thus, investors are advised to consider stocks with high GF Scores for potential investments. The GF Score ranges from 0 to 100, with 100 representing the highest potential for outperformance.
- Financial strength rank: 4/10
- Profitability rank: 5/10
- Growth rank: 9/10
- GF Value rank: 1/10
- Momentum rank: 3/10
Based on these metrics, GuruFocus assigned Vistra Corp a GF Score of 67 out of 100, indicating a challenging outlook for future performance.
Understanding Vistra Corp's Business
Vistra Corp, with a market cap of $30.94 billion and annual sales of $13.41 billion, is a major player in the power production and retail energy sectors in the United States. Following its 2024 acquisition of Energy Harbor, Vistra now controls 41 gigawatts of diverse power generation assets and one of the world's largest utility-scale battery projects. Its retail electricity business serves 5 million customers across 20 states, including nearly a third of all Texas electricity consumers. Vistra emerged as a standalone entity from the Energy Future Holdings bankruptcy in 2016 and expanded by acquiring Dynegy in 2018.
Financial Strength Breakdown
Vistra Corp's financial metrics reveal some concerns about its balance sheet health. The company's interest coverage ratio of 2.42 is lower than 57.66% of its industry peers, suggesting potential difficulties in managing interest expenses. Its Altman Z-Score of 1.01 indicates a risk of financial distress, and its low cash-to-debt ratio of 0.07 highlights challenges in debt management. Furthermore, a high debt-to-equity ratio of 2.9 and a debt-to-Ebitda ratio of 4.3 further underscore its financial vulnerabilities.
Profitability Concerns
The declining trend in Vistra Corp's Gross Margin over the past five years—from 38.42 in 2019 to 37.35 in 2023—raises additional concerns about its ability to convert revenue into profit effectively.
Conclusion
Considering Vistra Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's challenging position for potential underperformance. Investors should weigh these factors carefully when considering Vistra Corp as a potential investment. For those seeking more robust investment opportunities, explore other companies with strong GF Scores using the GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
