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Avista Corp (AVA)
NYSE:AVA
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Avista
(NYSE:AVA)
66Neutral
Positive Factors
Operational Efficiency
Year-over-year earnings increase at Avista Utilities due to rate relief and customer growth, showing some positive operational developments.
Regulatory Developments
The Washington Utilities and Transportation Commission approved a higher return on equity of 9.8%, which is an increase from the previously authorized 9.4%.
Renewable Energy
The generation mix is ~50% low-cost hydro and ~10% renewables, creating a favorable backdrop.
Negative Factors
Earnings Performance
Earnings per share for the first quarter fell short of analyst expectations, suggesting potential challenges in meeting financial targets.
Market Valuation
Valuing shares at -15% discount, consistent with Western smids, we do not see value given modest 5% EPS CAGR, and need to demonstrate execution of earned ROE step-up.
Regulatory Challenges
The Energy Recovery Mechanism did not receive support for changes, which may limit Avista's ability to adjust electric rates in response to changes in power supply costs.
Avista (AVA) vs. S&P 500 (SPY)
Market Cap
$3.16B
Dividend Yield4.79%
Average Volume (3M)844.26K
Price to Earnings (P/E)16.7
Beta (1Y)0.25
Revenue Growth3.14%
EPS Growth-2.66%
CountryUS
Employees1,920
SectorUtilities
Sector Strength91
IndustryDiversified Utilities
Share Statistics
EPS (TTM)0.98
Shares Outstanding80,563,560
10 Day Avg. Volume772,775
30 Day Avg. Volume844,256
Financial Highlights & Ratios
PEG Ratio-1.94
Price to Book (P/B)1.24
Price to Sales (P/S)0.00
P/FCF Ratio3.22K
Enterprise Value/Market Cap2.00
Enterprise Value/Revenue0.82
Enterprise Value/Gross Profit14.89
Enterprise Value/Ebitda2.67
Forecast
1Y Price Target
$41.00Price Target Upside4.49% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering3
Avista Business Overview & Revenue Model
Company DescriptionAvista Corporation, together with its subsidiaries, operates as an electric and natural gas utility company. It operates in two segments, Avista Utilities and AEL&P. The Avista Utilities segment provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho; and natural gas distribution services in parts of northeastern and southwestern Oregon, as well as generates electricity in Washington, Idaho, Oregon, and Montana. This segment also engages in the wholesale purchase and sale of electricity and natural gas. The AEL&P segment offers electric services to 17,400 customers in the city and borough of Juneau, Alaska. The company generates electricity through hydroelectric, thermal, and wind facilities. As of February 23, 2022, it provided electric service to 406,000 customers and natural gas to 372,000 customers. In addition, the company engages in venture fund investments, real estate investments, and other investments. Avista Corporation was incorporated in 1889 and is headquartered in Spokane, Washington.
How the Company Makes MoneyAvista makes money through the sale of electricity and natural gas to residential, commercial, and industrial customers. The company's revenue model is primarily based on regulated utility operations, which include the generation of electricity from hydroelectric, natural gas, coal, and other renewable sources, as well as the transmission and distribution of this energy to end-users. Avista's earnings are influenced by regulatory decisions regarding rates, energy consumption patterns, and infrastructure investments. Additionally, the company may engage in partnerships and initiatives aimed at expanding renewable energy sources and improving grid reliability, which can also contribute to its revenue streams.
Avista Financial Statement Overview
Summary
Avista faces significant financial challenges, with a negative gross profit and zero equity in 2024 indicating financial stress. High leverage and negative free cash flows are notable risks, despite stable operating cash flows. The company must address operational inefficiencies and manage debt levels to improve financial health.Income Statement
Avista's revenue has shown a fluctuating pattern with a noticeable decline in 2024. The gross profit margin is negative for 2024, indicating significant cost issues or impairments. Previous years showed moderate growth, but the recent downturn suggests potential operational challenges.45
Neutral
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio due to zero equity in 2024, indicating financial stress. Historical data shows a gradual increase in total debt, while equity has not grown proportionately, suggesting rising leverage risk.30
Negative
Cash Flow
Cash flow metrics indicate volatility, with free cash flow consistently negative, reflecting high capital expenditures. Operating cash flow has been positive historically, but the overall ability to generate free cash flow is constrained.50
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.94B | 1.75B | 1.71B | 1.44B | 1.32B |
| Gross Profit | ||||
| 1.14B | 1.05B | 974.35M | 941.81M | 923.38M |
| EBIT | ||||
| 306.00M | 257.69M | 190.24M | 228.23M | 232.70M |
| EBITDA | ||||
| 602.00M | 542.63M | 446.42M | 459.02M | 450.49M |
| Net Income Common Stockholders | ||||
| 180.00M | 171.18M | 155.18M | 147.33M | 129.49M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 30.00M | 35.00M | 13.43M | 22.17M | 14.20M |
| Total Assets | ||||
| 8.23B | 7.70B | 7.42B | 6.85B | 6.40B |
| Total Debt | ||||
| 3.12B | 3.03B | 2.92B | 2.60B | 2.39B |
| Net Debt | ||||
| 3.09B | 3.00B | 2.91B | 2.58B | 2.37B |
| Total Liabilities | ||||
| 5.35B | 5.22B | 5.08B | 4.70B | 4.37B |
| Stockholders Equity | ||||
| 2.59B | 2.49B | 2.33B | 2.15B | 2.03B |
| Cash Flow | Free Cash Flow | |||
| 1.00M | -51.56M | -327.79M | -172.60M | -73.30M |
| Operating Cash Flow | ||||
| 534.00M | 447.08M | 124.21M | 267.34M | 331.00M |
| Investing Cash Flow | ||||
| -539.00M | -510.39M | -460.24M | -444.92M | -410.74M |
| Financing Cash Flow | ||||
| 0.00 | 84.89M | 327.29M | 185.55M | 84.04M |
Avista Technical Analysis
Neutral
39.24
Price Trends
40.57
Negative
38.48
Positive
37.83
Positive
Market Momentum
-0.05
Positive
35.12
Neutral
10.49
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AVA, the sentiment is Neutral. The current price of 39.24 is below the 20-day moving average (MA) of 41.26, below the 50-day MA of 40.57, and above the 200-day MA of 37.83, indicating a neutral trend. The MACD of -0.05 indicates Positive momentum. The RSI at 35.12 is Neutral, neither overbought nor oversold. The STOCH value of 10.49 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AVA.
Avista Risk Analysis
Avista disclosed 20 risk factors in its most recent earnings report. Avista reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Avista Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $3.30B | 25.57 | 10.62% | 1.95% | 6.03% | 6.15% | |
71 Outperform | $3.42B | 14.50 | 7.94% | 4.65% | 4.31% | 19.33% | |
69 Neutral | $4.21B | 14.83 | 8.02% | 4.49% | 3.28% | -3.49% | |
66 Neutral | $3.16B | 16.71 | 7.25% | 4.79% | 3.14% | -2.66% | |
64 Neutral | $3.80B | 20.57 | 6.49% | 4.35% | -11.15% | -23.41% | |
63 Neutral | $8.42B | 10.38 | 5.35% | 4.36% | 3.59% | -11.58% | |
62 Neutral | $3.28B | 11.15 | 18.38% | 2.50% | -2.68% | -3.73% |
* Utilities Sector Average
Performance Comparison
AVA
Avista
39.24
2.84
7.80%
ALE
Allete
65.58
4.70
7.72%
BKH
Black Hills
58.07
3.85
7.10%
MGEE
MGE Energy
90.30
10.53
13.20%
NWE
Northwestern
55.74
6.75
13.78%
OTTR
Otter Tail
78.28
-12.06
-13.35%
Avista Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: -6.12%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlights a strong first quarter performance driven by robust earnings growth and strategic advancements with large load customers and wildfire mitigation legislation. However, challenges such as losses in unregulated businesses, expenses related to the ERM, and potential tariff risks present concerns. The overall sentiment captures a positive outlook with caution on certain issues.Q1-2025 Updates
Positive Updates
Strong First Quarter Performance
Avista's consolidated earnings for the first quarter of 2025 improved by almost 8%, with earnings at $0.98 per diluted share compared to $0.91 in the first quarter of 2024.
Advancement of Large Load Customer Discussions
Progress with potential new large load customers continues, offering opportunities for grid enhancements, employment, and increased sales tax revenue.
Wildfire Mitigation Legislation
Critical wildfire legislation passed in Washington and Idaho, providing significant progress in addressing wildfire risks.
Resolution of Babb Road Fire Litigation
A settlement in principle was reached for the Babb Road Fire litigation, with no impact on earnings as insurance is expected to cover the $21 million liability.
Capital Expenditure Plans
Avista plans to invest $525 million in capital expenditures for 2025 and nearly $3 billion from 2025 through 2029, indicating a 5% to 6% annual growth rate.
Negative Updates
Underperformance in Unregulated Businesses
A $0.03 loss per diluted share was recognized in the first quarter due to market volatility and losses from early-stage joint venture investments.
Energy Recovery Mechanism (ERM) Expense
A pre-tax expense of $7 million was recorded under the ERM, contributing to an expected negative impact of $0.12 per share from the ERM for 2025.
Potential Tariff Risks
New tariffs proposed by the administration could impact the supply chain, although currently mitigated through risk management strategies.
Company Guidance
During the Avista Corporation's First Quarter 2025 Earnings Conference Call, several key metrics and guidance points were discussed. The company reported consolidated earnings of $0.98 per diluted share for Q1 2025, up from $0.91 in Q1 2024, marking an almost 8% improvement driven by Avista Utilities. The company confirmed its 2025 consolidated earnings guidance range of $2.52 to $2.72 per diluted share, with Avista Utilities expected to contribute between $2.43 and $2.61. Avista Utilities’ capital expenditures were $100 million for Q1 2025, with expectations of $525 million for the full year and nearly $3 billion from 2025 to 2029. Additionally, Avista plans to issue up to $120 million in long-term debt and $80 million in common stock in 2025. The company is also advancing an RFP process, seeking bids ranging from 50 to 400 megawatts of generation to meet needs identified for 2029, with a final shortlist expected by the end of the year.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.