VST Stock Underperforms Industry in the Past 6 Months: Buy or Hold?

Shares of Vistra Corp. VST have lost 15.6% in the past six months, wider than the Zacks Utility- Electric Power industry’s decline of 9% and the Zacks Utilities sector’s decrease of 8.9%.

The company is exposed to retail demand variability, regulatory timing and declining hedge coverage, which increases its exposure to power markets. However, Vistra is strengthening its growth prospects through strategic investments in retail operations, renewable generation and energy storage, supporting the transition toward a cleaner and more sustainable energy future.

Price Performance (Six Months)

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Another utility, NextEra Energy NEE, also produces a substantial volume of clean energy from its generation assets. NextEra Energy’s shares have declined 8.8% in the past six months.

Should you consider adding VST to your portfolio only based on softness in price movements? 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.

VST Stock Lags: Are Growth Drivers Strong Enough?

Long-term PPAs remain a key part of Vistra’s strategy to expand contracted earnings while preserving exposure to merchant markets. Agreements with Meta at its PJM nuclear plants and AWS at Comanche Peak are expected to strengthen contracted revenues as they take effect, with a portion of the Meta-related benefits anticipated in 2027.

Vistra expects sustained load growth to support higher utilization and contracting opportunities across its dispatchable generation fleet. Management projects annual energy demand growth of roughly 4% to 6% in ERCOT and 2% to 3% in PJM, with both markets reaching record peak loads in 2026. The company’s growth strategy now includes acquisitions, organic generation investments and digital infrastructure expansion.

Vistra’s diversified 44,000-MW generation fleet, spanning natural gas, nuclear, coal, solar and storage, strengthens its ability to meet rising electricity demand. Its balanced portfolio supports reliability, operational flexibility and cost management while positioning the company to benefit from growing power needs from AI-driven data centers and other commercial customers.

Vistra remains focused on disciplined capital deployment, emphasizing nuclear expansion, additional solar and battery storage capacity, and optimization of its natural gas fleet to meet peak demand. Declining interest rates could further improve financial flexibility by lowering borrowing costs and interest expenses.

Headwinds for Vistra

The company functions as a merchant power producer that relies heavily on competitive electricity pricing, leaving its ability to capture outsized margins vulnerable to increasing regulatory pressures.

VST’s Earnings Estimates Are Moving Down

The Zacks Consensus Estimate for Vistra’s earnings per share for 2026 and 2027 indicates a decline of 3.56% and 6.08%, respectively, in the past 60 days.

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The same for NextEra Energy’s earnings per share for 2026 and 2027 has remained unchanged in the past 60 days.

VST Stock’s ROE Is Higher Than Its Industry

Return on equity (“ROE”), a profitability measure, reflects how effectively a company is utilizing shareholders’ funds in its operations to generate income.

VST’s trailing 12-month ROE is 108.68%, way ahead of its industry average of 11.4%.

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Another utility, Duke Energy Corporation DUK, also produces a substantial volume of clean energy from its nuclear generation assets. Duke Energy’s ROE is 9.78% lower than the industry.

VST Stock Is Trading at a Discount

Vistra is currently trading at a discounted valuation compared with the industry. Its forward 12-month price-to-earnings (P/E) ratio is 13.8X compared with the industry average of 15.23X.

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Vistra Increases Shareholder’s Value

Vistra continues to increase its shareholders' value through the share repurchase program and dividend payments.

The company expects roughly $3 billion to go to share repurchases and dividends in the 2026-2027 period. As of Aug. 3, 2026, Vistra had repurchased more than $6.5 billion of shares since November 2021, retiring about 171 million shares at an average cost near $38. About $1.2 billion of authorization remains and is expected to be completed no later than year-end 2027. Management has approved an increase in the dividend rate 19 times in the past five years. 

Duke Energy is also paying dividends on regular intervals to increase the value of its shareholders. The current dividend yield of the company is 3.56% higher than the Zacks S&P 500 composite’s yield of 1.34%.

VST’s Long-Term Debt to Capital

Vistra’s long-term debt to capital is currently pegged at 78.1%, higher than its industry average of 61.32%.

Rounding Up

Vistra remains exposed to wholesale power price volatility, and its relatively high long-term debt compared with several industry peers also adds financial risk. Declining earnings estimates are a concern.

However, Vistra is positioned to capitalize on rising demand for cleaner electricity, supported by its diversified generation portfolio and growing focus on low-carbon energy sources. Continued additions to its clean energy assets should further support long-term growth. VST is also trading at a discount.

VST’s ROE is better than the industry, and the capital return program makes the stock attractive. It will be a good choice for existing investors to hold their positions in this Zacks Rank #3 (Hold) stock.
 
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This article originally published on Zacks Investment Research (zacks.com).

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