Today we're going to take a look at the well-established Vistra Corp. (NYSE:VST). The company's stock saw a significant share price rise of 39% in the past couple of months on the NYSE. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Vistra’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Check out our latest analysis for Vistra
What Is Vistra Worth?
Vistra appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Vistra’s ratio of 53.07x is above its peer average of 35.26x, which suggests the stock is trading at a higher price compared to the Renewable Energy industry. But, is there another opportunity to buy low in the future? Given that Vistra’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Vistra look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for Vistra. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in VST’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe VST should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on VST for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for VST, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about Vistra as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Vistra you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
About NYSE:VST
Vistra
Operates as an integrated retail electricity and power generation company.
Solid track record with mediocre balance sheet.
