Critical Review: TransAlta (TAC) and Vistra Energy (VST)
TransAlta (NYSE:TAC) and Vistra Energy (NYSE:VST) are both utilities companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, profitability, dividends, earnings, valuation and institutional ownership.
Volatility & Risk
TransAlta has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500. Comparatively, Vistra Energy has a beta of -0.2, indicating that its share price is 120% less volatile than the S&P 500.
55.6% of TransAlta shares are held by institutional investors. 15.7% of Vistra Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
TransAlta pays an annual dividend of $0.12 per share and has a dividend yield of 2.2%. Vistra Energy does not pay a dividend. TransAlta pays out -66.7% of its earnings in the form of a dividend.
Valuation and Earnings
This table compares TransAlta and Vistra Energy’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|TransAlta||$1.78 billion||0.89||-$123.42 million||($0.18)||-30.61|
|Vistra Energy||$5.43 billion||2.16||-$254.00 million||$0.96||23.59|
TransAlta has higher earnings, but lower revenue than Vistra Energy. TransAlta is trading at a lower price-to-earnings ratio than Vistra Energy, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and target prices for TransAlta and Vistra Energy, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Vistra Energy has a consensus target price of $24.75, indicating a potential upside of 9.27%. Given Vistra Energy’s stronger consensus rating and higher possible upside, analysts plainly believe Vistra Energy is more favorable than TransAlta.
This table compares TransAlta and Vistra Energy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Vistra Energy beats TransAlta on 10 of the 15 factors compared between the two stocks.
TransAlta Company Profile
TransAlta Corporation operates as non-regulated electricity generation and energy marketing company in Canada, the United States, and Western Australia. The company operates through eight segments: Canadian Coal, U.S. Coal, Canadian Gas, Australian Gas, Wind and Solar, Hydro, Energy Marketing, and Corporate. It generates and markets electricity through various generation facilities. The company has an aggregate net ownership interest of approximately 8,546 megawatts of generating capacity. TransAlta Corporation was founded in 1909 and is headquartered in Calgary, Canada.
Vistra Energy Company Profile
Vistra Energy Corp., through its subsidiaries, engages in the integrated power business in Texas. The company operates through Wholesale Generation and Retail Electricity segments. The Wholesale Generation segment engages in the electricity generation, wholesale energy sales and purchases, commodity risk management, fuel production, and fuel logistics management activities. As of February 26, 2018, this segment had a fleet of generation facilities totaling approximately 14,000 megawatts of generation in Texas, including 2,300 megawatts fueled by nuclear power, 4,000 megawatts fueled by coal, and 7,500 megawatts fueled by natural gas. The Retail Electricity segment is involved in the retail sale of electricity and related services to residential, commercial, and industrial customers under the TXU Energy brand. This segment served approximately 1.7 million residential and business customers. The company was formerly known as TCEH Corp. and changed its name to Vistra Energy Corp. in November 2016. The company is based in Irving, Texas.
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