Avista (AVA) AI Stock Analysis

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Avista

(NYSE:AVA)

56Neutral

Avista's overall stock score reflects a company facing financial challenges with negative equity and cash flow constraints, despite stable operating cash flows. Technical analysis shows upward momentum, but overbought conditions suggest caution. Valuation is reasonable, but financial stress and mixed earnings call sentiment weigh on the outlook. Improvements in operational efficiency and debt management are crucial for future performance.

Positive Factors

Customer Opportunities

The potential for large load customer opportunities, particularly from data centers, presents a favorable growth opportunity.

Earnings Growth

ROE improvement and rate relief are key drivers for growth, providing a positive outlook for Avista's earnings.

Energy Mix

The generation mix with a significant portion from low-cost hydro and renewables creates a favorable backdrop for Avista.

Negative Factors

Earnings and Dividend Growth

Avista continues to offer below-average earnings per share and dividend per share growth, with success relying on management's ability to close the gap between authorized and earned ROE.

Financial Valuation

Valuing shares at a -15% discount indicates a perceived lack of value given the modest growth expectations.

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

$3.19B

Dividend Yield4.84%

Average Volume (3M)1.13M

Price to Earnings (P/E)17.4

Beta (1Y)0.29

Revenue Growth10.64%

EPS Growth2.28%

CountryUS

Employees1,920

SectorUtilities

Sector Strength88

IndustryDiversified Utilities

Share Statistics

EPS (TTM)2.28

Shares Outstanding80,289,270

10 Day Avg. Volume1,131,995

30 Day Avg. Volume1,128,644

Financial Highlights & Ratios

PEG Ratio7.63

Price to Book (P/B)N/A

Price to Sales (P/S)1.64

Price to Cash Flow (P/CF)8.90

P/FCF Ratio8.90

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$39.33

Price Target Upside-0.96% Downside

Rating ConsensusModerate Sell

Number of Analyst Covering3

Avista Business Overview & Revenue Model

Company DescriptionAvista Corporation (AVA) is a diversified energy company primarily involved in the generation, transmission, and distribution of electricity and natural gas. Headquartered in Spokane, Washington, Avista serves customers across eastern Washington, northern Idaho, and parts of southern and eastern Oregon. The company is committed to delivering reliable energy solutions and is actively engaged in sustainable practices to enhance its operational efficiency and environmental responsibility.

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

Neutral

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.

Balance Sheet

Negative

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.

Cash Flow

Neutral

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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
7.94B	7.70B	7.42B	6.85B	6.40B
	Total Debt
39.00M	3.03B	2.92B	2.60B	2.39B
	Net Debt
39.00M	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

Technical Analysis Sentiment

Neutral

Last Price39.71

Price Trends

50DMA

38.76

Positive

100DMA

37.62

Positive

200DMA

37.05

Positive

Market Momentum

MACD

0.84

Negative

RSI

77.23

Negative

STOCH

96.84

Negative

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 39.71 is below the 20-day moving average (MA) of 40.34, above the 50-day MA of 38.76, and above the 200-day MA of 37.05, indicating a neutral trend. The MACD of 0.84 indicates Negative momentum. The RSI at 77.23 is Negative, neither overbought nor oversold. The STOCH value of 96.84 is Negative, 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 (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ALE	73 Outperform	$3.78B	21.00	6.34%	4.41%	-18.62%	-27.88%
OTTR	73 Outperform	$3.26B	10.88	19.39%	2.58%	-1.38%	2.28%
BKH	72 Outperform	$4.18B	14.84	8.13%	4.63%	-8.73%	0.14%
NWE	68 Neutral	$3.42B	15.25	7.94%	4.77%	6.45%	13.95%
Sector *	65 Neutral	$11.76B	15.57	6.23%	4.62%	5.52%	-8.96%
MGEE	63 Neutral	$3.25B	26.77	10.17%	2.05%	-1.95%	2.33%
AVA	56 Neutral	$3.19B	17.39	7.09%	4.84%	10.64%	2.28%

* Utilities Sector Average

Performance Comparison

AVA

Avista

39.71

7.23

22.26%

ALE

Allete

65.14

8.80

15.62%

BKH

Black Hills

57.99

7.82

15.59%

MGEE

MGE Energy

89.06

15.01

20.27%

NWE

Northwestern

55.67

9.05

19.41%

OTTR

Otter Tail

77.98

-3.08

-3.80%

Avista Earnings Call Summary

Earnings Call Date: Feb 26, 2025 | % Change Since: 4.06% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook with significant investment in infrastructure, favorable regulatory outcomes, and a positive earnings guidance for 2025. However, declines in Q4 earnings, challenges with the energy recovery mechanism, and losses in other business areas were notable concerns.

Highlights

Record Capital Investment

Avista Utilities invested a record $510 million in 2024 to better serve customers, signaling a strong commitment to infrastructure improvement.

Constructive Regulatory Outcomes

The Washington general rate cases concluded with a balanced positive outcome, increasing the return on equity to 9.8% and supporting deferral mechanisms for wildfire and insurance costs.

Wildfire Mitigation Success

Met or exceeded 2024 targets for distribution grid hardening, transmission hardening, vegetation management, and enhanced fire safety mode automation with AI-enabled cameras.

Dividend Increase

For the twenty-third consecutive year, the dividend was increased by over 3% to $1.96 per share, demonstrating a commitment to shareholder returns.

Positive Earnings Guidance

Initiated 2025 earnings guidance at $2.52 to $2.72 per diluted share, reflecting a strong outlook for the coming year.

Lowlights

Decline in Q4 Earnings

Fourth quarter earnings per diluted share decreased to $0.84 from $1.08 in the same period in 2023.

Energy Recovery Mechanism Challenges

Denial of proposed modifications by the Washington Commission resulted in an expected $0.12 expense from the energy recovery mechanism in 2025.

Losses in Other Businesses

Recognized a $0.09 loss per diluted share in 2024 due to periodic market valuations and losses from early-stage joint venture investments.

Increased O&M Expenses

Projected a 15% increase in O&M expenses for 2025, partly due to amortizations and increased base costs such as labor and benefits.

Company Guidance

In the Avista Corporation's fourth quarter 2024 earnings call, the company provided detailed guidance for 2025. The earnings guidance is set at a range of $2.52 to $2.72 per diluted share, with the midpoint including a $0.12 expense from the energy recovery mechanism and a zero contribution from other businesses. Avista Utilities is expected to contribute between $2.43 and $2.61 per diluted share, while AEL&P is projected to contribute $0.09 to $0.11 per diluted share. The company anticipates capital expenditures of $525 million in 2025, excluding potential investments from an RFP process or new large load customers. Over the next five years, Avista expects capital expenditures to reach nearly $3 billion, with an annual growth rate of 5% to 6%. The company also highlighted its efforts in regulatory strategy, wildfire mitigation, and infrastructure investment as critical components of its success. Additionally, the company plans to issue up to $120 million of long-term debt and $80 million in common stock in 2025.

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.