The U.S. Department of Energy has announced a conditional loan commitment of up to $4.2 billion to Vistra to add power capacity at three nuclear plants. The stock is still down 23% over the past year, and The Motley Fool argues the pullback leaves it cheaper than before.
The U.S. Department of Energy's Office of Energy Dominance Financing announced a conditional loan commitment of up to $4.2 billion to Vistra on Oct. 5. The company plans to add power capacity without constructing new power plants or reactors.
Loan targets three nuclear plants in PJM
The funding will help finance nuclear uprates and modernization at three plants in the PJM Interconnection region: Beaver Valley in Pennsylvania, and Davis-Besse and Perry in Ohio.
This investment will help the reactors operate another 20 years beyond their existing licenses and add 433 megawatts of clean baseload capacity. It would also preserve nearly 4 gigawatts of existing generation that serves more than 3 million homes.
Power prices and regulation add risk
The extra output arrives as PJM's 2028-2029 base residual auction recently cleared at the $325-per-megawatt-day price ceiling across all zones, which raised concerns that such pricing is unsustainable. Meanwhile, residential customers are pushing back on rising electricity rates.
Regulators pose one of the biggest risks for independent power producers, the article says, through price caps or other market interventions. Vistra sells electricity into competitive wholesale markets or through contracts, so it can capture upside when energy markets tighten but also faces downside if demand softens.
Valuation after the pullback
Vistra stock is down 27% from its all-time high of nearly $220 per share last year. It traded at around 25 times its 2026 forecast earnings, but now trades at 18.5 times earnings.
The Motley Fool notes that earnings are projected to grow 18% each of the next two years. The author concludes that the dip allows investors to buy the stock today.
Source: The Motley Fool
Trading involves risk.
Risk Disclaimer
