Vistra Corp (VST) in my opinion is a very interesting stock that seems to represent a split in market views right now. Vistra Corp is one of America's largest publicly traded power companies holding a market cap of 49.2 Billion with 19.2 billion in revenue (TTM) and 2.22 billion in net income (TTM) Currently it is trading at 30 percent lower (146) from its all time high of 209.
Bull Case
It seemingly has decent market fundamentals, current pe of 25 which is higher than I would wish but it is trading at a future pe of 17 which seems more reasonable compared to market averages right now. Its PEG ratio is at 0.43 and its EV/EBITDA is at a respectable 11. Furthermore, with the IPO's of Anthropic and OpenAI seemingly happening soon more money will likely be converted into increased data centre buildouts. These data centres will require vast amounts of energy. However, this is all dependent on the AI train continuing on which is the trillion dollar question. VST has locked in contracts with Meta and Amazon for 20 years and benefits with large economies of scale. Its position is semi protected with high startup costs ensuring a large difficulty for future entrants. It also boasts a free cash flow of 4 billion dollars and adjusted EBITDA up 30 percent from last year. For what its worth analysts are putting the 1 year target estimate at $221. While obviously these predictions tend to be inaccurate they give a general sense in which direction the price is likely to move.
Bear Case
Around 17 billion dollars in debt and the utilities industry is not exactly famous for profit. If AI proves to be too cumbersome to deploy this company will definitely be one of the biggest potential losers. Numerous competitors and it is highly reliant on non renewable energy sources which are more expensive. Small nuclear fleet compared to Constellations Energy Group (21 vs 6).
Any insights? I know there is definitely a lot of stuff I overlooked so feel free to comment and add.