Avista Corporation AVA is an energy company involved in the production, transmission and distribution of energy and other energy-related businesses. The company focuses on providing safe, reliable and responsible energy and consistent investments in infrastructure.
Let’s explore the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment.
Growth Projections & Long-Term Earnings Growth
The Zacks Consensus Estimate for AVA’s 2023 earnings per share (EPS) is pegged at $2.32. This indicates a year-over-year bottom-line increase of 9.4%.
The company’s long-term (three- to five-year) earnings growth is pegged at 6.3%.
Return on Equity (ROE)
ROE indicates how efficiently a company has been utilizing its funds to generate higher returns. Avista’s ROE is currently pegged at 6%, better than industry’s average of 4.9%, which indicates that the company is utilizing its funds more efficiently than peers.
Avista’s total debt to capital is 52%, better than the industry’s average of 53.7%.
AVA has a current ratio of 1.1, much better than the industry’s average of 0.9. This implies that the company is able to meet its short-term debt with its current assets.
The utility company has been consistently paying dividends to its shareholders. Avista paid out $1.76 per share in 2022. It raised its dividend in February 2023, taking the quarterly figure to 46 cents resulting in an annual payout of $1.84 per share.
The company increased its dividend five times in the past five years. AVA’s current dividend yield is 4.3%, better than the industry’s average of 3.4%.
Avista is continuously making investments to improve service and system reliability for the customers and replace aging infrastructure. The capital expenditure was $98 million in first-quarter 2023, and is expected to be $475 million in the 2023-2025 period.
In the past six months, shares of AVA have lost 2.3% compared with the broader industry’s 6.1% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks in the same industry are Consolidated Edison Inc. ED, NorthWestern Corporation NWE and NiSource Inc. NI, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
ED’s long-term (three- to five-year) earnings growth rate is 2%. The Zacks Consensus Estimate for 2023 EPS is pegged at $4.86, implying a year-over-year improvement of 6.8%.
NWE’s long-term earnings growth rate is 6.8%. The Zacks Consensus Estimate for 2023 EPS is pegged at $3.48, implying a year-over-year improvement of 9.4%.
NI’s long-term earnings growth rate is 6.9%. The Zacks Consensus Estimate for 2023 EPS is pegged at $1.57, implying a year-over-year improvement of 6.8%.
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