Vistra Corp.VSTNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $161.15 per share(market-calibrated)

-2.9%

Upside to Fair Value

Current

$165.99

Pure Model

$159.09

Fair Value

$161.15

Bull Case

$195.25

Bear Case

$125.16

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

5.76%

Calibrated Growth

2.56%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $159.09.

What's Driving This Ratingfor VST

↓

CapEx normalizing toward maintenance

Historical CapEx is 11.31% of revenue (heavy investment phase). Model fades this to 5.00% by Year 10, freeing up ~$1.9B in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 8.36% — below the sector mature average of 20.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $4.8B (16.19% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 29.14% in Year 1 to 3.97% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $124.36/share (10.3x terminal FCF) while exit multiple gives $193.82/share (21.7x terminal FCF). The 16x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.00% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $165.99, the market implies 5.76% perpetual growth — 376bps above the model's 2.00%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 73.75% indicates efficient cash generation. FCF reaches $6.4B by Year 10 (21.61% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.44

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)10.99%

Cost of Debt

Pre-tax Cost of Debt49.70%

Tax Rate15.94%

After-tax Cost of Debt41.78%

Equity Weight (E/V)96.91%

Debt Weight (D/V)3.09%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (96.91% × 10.99%) + (3.09% × 41.78%)

= 11.95%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$22.9B	$24.8B	$25.7B	$27.5B	$29.5B
EBIT	$1.9B	$2.1B	$2.2B	$3.5B	$4.8B
Tax	$305M	$331M	$343M	$550M	$761M
NOPAT	$1.6B	$1.7B	$1.8B	$2.9B	$4.0B
+ Depreciation	$3.0B	$3.3B	$3.4B	$3.6B	$3.9B
- Capex	$2.6B	$2.5B	$2.2B	$2.0B	$1.5B
- Δ NWC	$292M	-$25M	$55M	$48M	$33M
Free Cash Flow	$1.7B	$2.6B	$2.9B	$4.5B	$6.4B
Discount Factor	0.893	0.713	0.569	0.454	0.324
Present Value	$1.5B	$1.8B	$1.7B	$2.0B	$2.1B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$6.4B

Terminal Growth Rate2.00%

WACC11.95%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$65.4B

PV of Terminal Value$21.2B

Exit Multiple Method

Year 10 EBITDA$8.6B

Exit Multiple (EV/EBITDA)16.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$138.4B

PV of Terminal Value$44.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$18.8B

PV of Terminal Value$21.2B

Enterprise Value$40.0B

(-) Net Debt-$2.3B

Equity Value$42.3B

Shares Outstanding340M

Price per Share$124.36

Exit Multiple Method

PV of Projected FCFs$18.8B

PV of Terminal Value$44.8B

Enterprise Value$63.6B

(-) Net Debt-$2.3B

Equity Value$65.9B

Shares Outstanding340M

Price per Share$193.82

Pure Model Fair Value

$159.09

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.00%	1.50%	2.00%	2.50%	3.00%
9.95%	$188.15	$190.79	$193.77	$197.15	$201.02
10.95%	$170.82	$172.78	$174.96	$177.40	$180.14
11.95%	$155.97	$157.46	$159.09	$160.90	$162.91
12.95%	$143.09	$144.24	$145.49	$146.86	$148.37
13.95%	$131.81	$132.71	$133.69	$134.75	$135.90

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$125.16

-24.6% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.80

Base Case

$159.09

-4.2% vs current

• Analyst consensus
• Terminal growth: 2.0%
• Beta: 1.44

Bull Case

$195.25

17.6% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.23

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Utilities Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth29.14%

Year 3 Revenue Growth-1.77%

Year 5 Revenue Growth3.97%

Year 7 Revenue Growth3.18%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin8.36%

Terminal EBIT Margin20.00%

Tax Rate15.94%

Historical Capex / Rev11.31%

Terminal Capex / Rev5.00%

NWC / Revenue5.65%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 16x EV/EBITDA (Utilities sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance