Why Vistra Stock Dropped After Earnings

The stock of electric and gas utility Vistra (NYSE: VST) fell 6.3% through 11:45 a.m. ET Wednesday, despite the company reporting a 30% jump in revenue this morning.

Investors seem more concerned with how much Vistra lost while reporting the greater revenue.

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Vistra's Q1 earnings

Vistra reported a $268 million net loss for the quarter. Cash from operations surged 92% year over year to $599 million, but the company spent $768 million on capital expenditures, including purchasing nuclear fuel, resulting in negative free cash flow of $169 million for the quarter.

Despite the numbers, CEO Jim Burke insisted Vistra "kicked off 2025 with another strong quarter of business performance," and reaffirmed guidance for the rest of 2025 -- although I'm not sure how much that helps investors.

Rather than guiding on revenue or earnings, Vistra gives guidance in the very company-specific formats of "ongoing operations adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization)," and "ongoing operations adjusted FCFbG," which refers to what free cash flow would be "bG," or before capital spending intended to grow the business.

Is Vistra stock a buy?

That's actually probably the more useful metric for investors, and Vistra is saying its free cash flow, before growth costs, will range from $3 billion to $3.6 billion this year, which sounds flat against last year's $3 billion in plain old free cash flow (after investments for growth). Relative to Vistra's market capitalization of just under $46 billion, it also means the stock costs somewhere between about 13 and 15 times FCF.

And granted, that valuation will get a bit higher after growth investments are accounted for. Still, with analysts forecasting a long-term earnings growth rate of 20%, it seems a fair valuation to me -- maybe even cheap.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.