Is This Nuclear Energy Stock a Buy, Sell, or Hold After Earnings?

Nuclear energy stocks are gaining momentum as the demand for reliable, clean electricity rises. With the rapid growth of data-driven technologies like artificial intelligence (AI) and cloud computing, energy consumption by data centers is pushing traditional power sources to their limits. These data centers, which support AI processing and cloud services, require constant, high-capacity electricity. As a result, the need for sustainable and scalable power is becoming more pressing. Nuclear power is increasingly seen as a solution, providing a steady, carbon-free energy source that can meet the growing energy demands of our digital age.

As tech giants ramp up their infrastructure, nuclear energy stocks are reemerging as a strategic play, as the once-unpopular fuel source is now potentially positioned as the backbone of our future energy grid. Experts are calling it a “nuclear renaissance,” driven not just by climate goals but also by the necessity for dependable, round-the-clock power. Morgan Stanley projects that nuclear energy investments could reach a staggering $1.5 trillion by 2050, underscoring the high expectations for this industry.

Vistra Corp. (VST), a Texas-based utility company, is emerging as a leading player in the nuclear energy space. Building on its strong foundation in clean and traditional energy, Vistra is strategically expanding into nuclear power to meet the rising demand for reliable, low-carbon electricity. As the market shifts toward decarbonization, Vistra is well-positioned to capitalize on the growth of nuclear energy, driven by increasing power needs from technologies like AI and cloud computing.

With that said, let's dive a little deeper into Vistra's growth story, fundamentals, and long-term outlook.

Nuclear Energy Stock Outperforms the Market

Vistra Corp (VST) is an energy company focused on the generation and transmission of clean electricity. It operates across various sectors of the renewable energy industry, including solar, wind, hydro, and other sustainable power sources. Currently, the company commands a market cap of $47.1 billion.

Utility stocks have been a surprising pocket of strength in the market this year, and one of the front-runners is VST, which is second only to high-flying Palantir(PLTR) as the best-performing S&P 500 Index($SPX) constituent of 2024. VST stock has outpaced the broader market with a gain of 269% this year, driven by investor optimism over battery storage upside and nuclear energy growth.

Along with this robust growth, Vistra is also committed to rewarding its shareholders through dividends. The company pays a quarterly dividend of $0.22, which translates into a modest yield of 0.64% at the stock's current heights.

Vistra Delivered Strong Q3 Results

Vistra recently reported excellent third-quarter results, posting record revenue of $6.28 billion, surpassing expectations by $1.28 billion. Adjusted earnings per share (EPS) came in at $5.25, far exceeding the $1.24 estimate and representing a 350% increase compared to the same quarter last year. Net income also rose a staggering 350% , reaching $1.8 billion for the third quarter.

In addition, Vistra achieved significant operational efficiencies, increasing EBITDA from $1.3 billion to $3.3 billion. Vistra ended the quarter with total available liquidity of approximately $3.995 million.

During the quarter, the company completed the $3.1 billion acquisition of the minority stake in Vistra Vision, strengthening its zero-carbon asset portfolio. It also raised its 2024 guidance, authorized a $1 billion share buyback, and secured power purchase agreements with major corporations like Amazon (AMZN) and Microsoft (MSFT). 

For the full year 2024, Vistra raised its EBITDA guidance from $5.01 billion to $5.2 billion and free cash flow guidance from $2.65 billion to $2.85 billion, signaling confidence in its long-term stability and growth. Looking ahead, analysts expects its earnings and revenue to grow by 39% and 11%, respectively, in fiscal 2025. 

Expanding Power Capacity to Meet Texas’s Growing Demand

Along with its nuclear ambitions, Vistra plans to construct 860 MW of advanced simple-cycle peaker plants in West Texas to meet the region's rising power demands, driven by the state's expanding oil and gas industry. 

Moreover, Vistra plans to repower a retired coal plant, which will add up to 600 MW of additional capacity once the coal facility is decommissioned. Specifically, Vistra's Coleto Creek Power Plant, which is coal-fueled and located near Goliad, is scheduled to retire in 2027 in order to comply with federal Environmental Protection Agency guidelines. This initiative is part of Vistra's strategic plan to transition towards more sustainable energy sources. 

With the help of these initiatives, Vistra will be able to bring almost 2000 megawatts of power to the ERCOT grid. Moreover, it will also support the grid when renewable resources are unavailable and battery storage is depleted.

Analysts' Ratings on VST Stock

The analyst community is quite bullish on VST, giving it a consensus " strong buy “ rating. Out of 12 analysts covering the stock, 11 have a “strong buy,” and only 1 has a “moderate buy.”

The average 12-month price target of $157.50 implies the stock could rise another 11% from current levels..

Bottom Line on Vistra Corp

Vistra is currently trading at 16.7 times 2025 earnings, which isn't too unreasonable, considering the expectations for surging electricity demand. Given the growth potential and passive income potential, I believe VST remains a buy for investors with a long-term horizon who believe in its ability to capitalize on the energy transition.