Vistra vs. Public Service Enterprise: Which Utility Stock Stands Out?

The companies belonging to the Zacks Utility-Electric Power industry present an attractive investment case, underpinned by stable cash flows and predictable earnings from regulated business models. Long-term power purchase agreements cushion U.S. utilities from economic volatility, while surging power demand from AI data centers, EV adoption and manufacturing reshoring fuels growth. Continued infrastructure and technology investments support efficiency, steady earnings and reliable dividends.

The industry is undergoing a significant transformation driven by the global push for decarbonization. Utilities are ramping up investments in renewables such as solar, wind, battery storage and grid upgrades. Early adopters of low-carbon technologies can benefit from market expansion, lower fuel-price risk and stronger interest from both institutional and retail investors.

Amid such a backdrop, let’s focus on two utilities, Vistra Corp. VST and Public Service Enterprise Group Inc. PEG, both of which are leveraging their nuclear power plants to produce a baseload of clean energy for their customers.

Vistra offers an attractive investment case, backed by a diversified generation mix and strong cash flow visibility. As a leading competitive power producer, it operates natural gas, nuclear, solar and battery storage assets, with nuclear providing stable, carbon-free baseload power. Combined with efficient thermal operations, growing renewables, disciplined capital allocation and solid free cash flow, Vistra is poised for sustainable growth and enhance shareholder value.

Public Service Enterprise Group presents a solid investment case, anchored by regulated utility operations and a strong carbon-free nuclear portfolio. Its PSE&G subsidiary delivers stable revenues through electric and gas distribution, supported by grid modernization efforts. Reliable, emissions-free nuclear generation, disciplined financial management and a dependable dividend will propel PSEG toward long-term growth and stability.

With both companies standing out in the utility sector, a head-to-head comparison helps determine which stock offers more compelling investment potential and stronger long-term value.

VST & PEG’s Earnings Growth Projections

The Zacks Consensus Estimate for Vistra’s earnings per share indicates a year-over-year increase of 67.71% for 2026. Long-term (three to five years) earnings growth per share is pegged at 18.89%.

The Zacks Consensus Estimate for Public Service Enterprise Group’s earnings per share implies a year-over-year increase of 8.64% for 2026. Long-term earnings growth per share is pegged at 7.05%.

Return on Equity

Return on Equity (“ROE”) is an essential financial indicator that evaluates a company’s efficiency in generating profits from the equity invested by its shareholders. It demonstrates how well management is utilizing the capital provided to increase earnings and deliver value.
 
VST’s current ROE is 64.04% compared with PEG’s 12.62%. The industry’s ROE is pegged at 10.7%.

Valuation

Vistra currently appears to be trading at a discount compared with Public Service Enterprise Group on a Price/Earnings Forward 12-month basis. (P/E- F12M).

PEG is currently trading at 18.68X, while VST is trading at 18.3X compared with the industry’s 15.82X.

Debt to Capital

The Zacks Utilities sector is a capital-intensive one, and huge investments are required at regular intervals to upgrade, maintain and expand operations. The usage of new evolving technology also requires investments. Therefore, utilities borrow from the market and add it to their internal cash generation to fund the long-term investments. 

PEG’s debt-to-capital currently stands at 57.88% compared with Vistra’s 75.38%. Both companies are using higher debt to fund their business. PEG and VST will benefit from the drop in long-term interest rates.

PEG & VST’s Dividend Yield

Dividends are regular payments made by a company to its shareholders and represent a direct way for investors to earn a return on their investment. They are an important indicator of a company’s financial health and stability, often signaling strong cash flow and consistent earnings. Utilities are known for regular dividend payments to their shareholders.

Currently, the dividend yield for Public Service Enterprise Group is 3.09%, while the same for Vistra is 0.55%. PEG’s dividend yield is also better than the S&P 500’s 1.36%.

Summing Up

Vistra and Public Service Enterprise Group are both efficiently serving their customers and adding more clean power generation assets to their portfolios.

Both companies are evenly matched utilities and currently have a Zacks Rank #3 (Hold). Public Service Enterprise Group uses lower debts to run operation, but Vistra has an edge due to its stronger earnings estimates movement, cheaper valuation and better ROE.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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