Title: Friday POW! — Pick of the Week: VST Show: Haymaker (Substack) — written post, Friday POW! (Picture/Pick Of the Week) Author: David Hay / Haymaker Team Date: 2026-08-14 URL: https://haymaker.substack.com/p/friday-pow-478 Length: written post — no timestamps Note: Verbatim article text captured via logged-in session (paid post). The Buys / Holds-Trims / Sells tables at the end are IMAGES (not OCR'd here); the text-grounded deltas are: VST = this week's Pick of the Week ("We are buyers of VST at today's price"), "DVN added, along with earlier WDOFF recommendation, for visibility" on the Buys table, and "Highlighted cells indicate today's updates." Disclosures boilerplate omitted. =====
Hello, Haymakers:
What we believe is (or will become) clear is that, at its core, the AI story is fundamentally an energy story. Who will win? How will it be (effectively) regulated? Will it massively displace labor? All these questions and handwringing are secondary to the fact that AI is going to require an enormous amount of reliable power to sustain its exponential growth trajectory, though that is likely to plateau in years to come.
Enter: Vistra Corp (VST)
VST is one of the largest competitive power generators in the United States, operating approximately 40,000 megawatts (40 gigawatts) across nuclear, natural gas, solar, and battery storage in the ERCOT and PJM grids, with a retail business serving approximately five million customers. This is equivalent to around 40 large-scale nuclear power plants, a truly immense power-generation base. Running the nation's second-largest competitive nuclear fleet, its stock is presently trading at approximately $145, down 36% from its 52-week high of $219.82. This week, the company reported Q2 2026 adjusted EBITDA (i.e., gross cash flow) of $1.767 billion (up 30% year-over-year, above consensus), reaffirmed full-year guidance of $6.8 to $7.6 billion, and announced the Helix Platform: a strategic data center infrastructure partnership with KKR, NVIDIA, and the Kuwait Investment Authority. The current guidance excludes contributions from the pending Cogentrix acquisition, the Meta nuclear PPAs, and Helix.
Key Highlights
Stock at ~$145; 52-week range $132.66-$219.82; market cap ~$58B; down ~36% from 52-week high
Q2 2026: adjusted EBITDA $1.767B, +30% YoY, beat $1.64B consensus; generation EBITDA +68% YoY to $994M; YTD adjusted EBITDA $3.261B vs. $2.589B in 2025
Revenue $4.02B missed consensus due to unrealized mark-to-market hedge losses — an accounting artifact, not an operational signal; ~100% of 2026 generation price hedged
Full-year 2026 guidance reaffirmed: adjusted EBITDA $6.8–$7.6B; adjusted FCF (free cash flow) before growth $3.925–$4.725B; management expects at or above midpoint
Guidance explicitly excludes: Cogentrix acquisition ($4.7B, ~5,500MW, pending H2 2026 close); Meta nuclear PPAs (Purchase Power Agreements, ~2,600MW PJM); Helix Platform; nuclear production tax credits
Helix Platform: KKR, NVIDIA, Kuwait Investment Authority partnership; Vistra commits up to $1B; serves as preferred power partner for data center infrastructure
AWS PPA ~3,800MW at Comanche Peak; Meta ~2,600MW PJM nuclear; Perry Nuclear license extended to 2046
PJM and ERCOT set all-time peak loads (168GW and 91GW) in July 2026; fleet achieved 97%+ commercial availability during record heat
2027 adjusted EBITDA midpoint opportunity $7.4–$7.8B; also excludes Cogentrix and Meta PPAs; hedge coverage ~94% in 2027, ~72% in 2028
(PJM = the Pennsylvania, New Jersey, Maryland interconnection, the largest power grid in the U.S. ERCOT = the Electricity Reliability Council of Texas, the grid operator for 90% of the state.)
Focus on the Revenue Miss Is, In Fact, Missing the Point
With a Q2 revenue miss of $4.02 billion versus $5.46 billion consensus, VST stock is predictably under pressure at the moment. It is real in the GAAP sense and irrelevant in the economic sense, but Vistra's revenue figure includes unrealized mark-to-market losses on forward hedges that will settle favorably in future periods. The hedge program creating the apparent miss is the same driver that gives the company near-complete 2026 earnings certainty. The generation EBITDA of $994 million growing 68% year-over-year, on a fleet that maintained 97% commercial availability during record summer heat in both ERCOT and PJM, is the operational reality. PJM and ERCOT set all-time peak loads of, respectively, 168 and 91 gigawatts in July. That is the structural AI demand proof the thesis requires, visible in real-time load data rather than forward projections.
Helix: More Than Just Another Power Purchase Agreement (PPA)
The recently announced Helix Platform is, in our view, the stock's long-term game-changer. Vistra is committing up to $1 billion to a strategic infrastructure partnership with KKR, NVIDIA, and the Kuwait Investment Authority (KIA) to serve as the preferred power partner for at-scale data-center development. NVIDIA provides compute expertise, KKR provides capital and deal sourcing, and KIA (not to be confused with the Korean manufacturer of famously reliable automobiles) provides a long-duration investment mandate. Vistra supplies the one thing none of them can build quickly: 24/7 dispatchable, carbon-friendly nuclear and gas generation in the markets where AI data centers are being built. None of the revenue from Helix is in any current guidance, and the partnership is structured to generate additional contracted capacity commitments as it deploys capital.
What Is/Is Not in the Numbers
The 2026 guidance midpoint of $7.2 billion in adjusted EBITDA is the starting point, not the destination. Cogentrix at $4.7 billion likely adds $470 to $590 million in annual EBITDA at close in H2 2026. The Meta PPA uplift begins flowing through as contracts reach effective dates. Helix generates contracted revenue as the partnership deploys. The 2028 EBITDA trajectory incorporating all three almost certainly exceeds $9 billion annualized. At a $58 billion cap, the market is pricing none of it.
The 2027 EBITDA opportunity of $7.4 to $7.8 billion, trending toward the lower end due to ERCOT forward curve softness, also excludes Cogentrix and Meta. Management's hedge coverage of 94% in 2027 and 72% in 2028 provides meaningful protection against that ERCOT headwind, while unhedged upside remains if power prices recover.
Pushing Back on the Recent WSJ Article
If you're a frequent reader of the Wall Street Journal's "Heard on the Street" section, you likely came across this week's rather bearish take on VST. The author is right that the easy version of the power thesis has weakened to a degree. Specifically, that regulators in ERCOT and PJM are trying to accelerate new generation and prevent existing plant owners from capturing unlimited scarcity rents as data-center demand rises.
But, that also does not mean incumbents like Vistra become less important.
The bottleneck is more than just policy, it is the physical ability to deliver reliable megawatts. New gas plants, nuclear capacity, transmission, transformers, and interconnections still take years to build. Vistra already owns scarce generation, existing grid connections, nuclear and gas assets, and relationships with hyperscalers.
In other words, the market is necessarily shifting from "own existing power and enjoy higher prices" to "own existing power and be one of the few companies capable of expanding reliable supply." Thus, we think the author underestimates Vistra's long-term position.
The regulatory response may cap some merchant-market upside, especially in ERCOT, but it also creates opportunities for direct contracts, uprates, brownfield expansions, and new capacity at existing sites. Vistra's Meta, AWS, Cogentrix, and Helix initiatives are already moving it in that direction.
So the thesis is evolving, not breaking: the next phase of the power trade is less about passive scarcity rents and more about who can actually deliver incremental dispatchable power, and Vistra is one of the best-positioned companies to do that.
Valuation
At approximately $141 and 10.6x 2026 adjusted EBITDA guidance midpoint on an enterprise value basis, Vistra trades at a meaningful discount to Constellation Energy at approximately 14.5 times earnings (P/E). This is despite Vistra's multiple being calculated on forward guidance that explicitly excludes Cogentrix, the Meta PPAs, and Helix.
[Chart: Five-Year Price/Sales and P/E Chart — Bloomberg]
FCF yield is the most compelling entry-point metric: 2026 adjusted FCF guidance midpoint of $4.325 billion against a market cap of approximately $47.5 billion is approximately 9.1%.
Management's medium-term target of converting over 60% of adjusted EBITDA to FCF, applied to a 2028 EBITDA base approaching $9 billion as the excluded catalysts begin contributing, implies normalized annual FCF of approximately $5.4 billion. That would represent an 11.4% yield on current market cap before any re-rating. Analyst consensus across 20 analysts is Buy with an average price target of approximately $217, implying roughly 54% upside from current level.
Arguing the Other Side
The bear case has three components, all credible to some degree.
ERCOT forward curve softness is compressing unhedged 2027 and 2028 generation margins as renewable additions outpace Texas' near-term demand growth.
Helix's $1 billion commitment is capital subject to milestones and execution risk in an unfamiliar infrastructure-development business.
PJM regulatory uncertainty around the IRAS (Interim Resource Adequacy Service) capacity market framework could reduce capacity revenue that has been a significant earnings tailwind.
We believe the bear case is justifiable only if all three occur simultaneously. At 10.6x EV/EBITDA on guidance that excludes Cogentrix, Meta, Helix, and nuclear-production tax credits, with a fully hedged 2026 book and the most constrained power-generation asset class in the U.S. at the center of the AI infrastructure buildout (the PJM region), we think that threshold is too high.
(To many, the big risk with this type of name is that the great data center build-out hits the wall. It might be prudent to say that we think it could slow meaningfully, but it is almost certain to continue at a rapid clip, just not as fast as is now projected. The hyperscalers view not keeping pace with their peers as an existential risk.)
Technical Set Up
Clearly, VST has been range-trading for the last two years. Its big breakout was in 2023, prior to an extremely explosive run. This has obviously been a spectacular increase, despite its correction since last year's peak. But it has been largely an earnings-driven moonshot: earnings have rocketed from just over $1.00/share in 2022 to an estimate of $9.13 this year.
[Chart: Five-Year Price Chart (yellow line is the 200-day moving average) — Bloomberg]
It is somewhat concerning that VST has been trading below the 200-moving average for over a year. This isn't ideal, but it has been stabilizing in the 150 range for most of 2026. To be on the safe side, you could put in a stop at 130, right below short-term support.
The Bottom Line
Investors in VST today get the second-largest competitive nuclear fleet in the United States, a company that delivered 30% adjusted EBITDA growth in Q2 on a fully hedged book, maintained 97% fleet availability during record summer heat, and generated $3.261 billion in adjusted EBITDA in the first half of 2026 alone.
It is, in fact, a stock trading at a 36% discount to its 52-week high, where the primary narrative overhang is a GAAP revenue line distorted by hedge accounting rather than any deterioration in the operational business.
The case rests on a pretty straightforward gap: Vistra at 10.6x forward EV/EBITDA on conservative guidance versus Constellation Energy at 13.6x trailing EV/EBITDA, with VST's multiple calculated before Cogentrix, the Meta PPAs, and Helix contribute a single dollar. Management's medium-term target of converting over 60% of EBITDA to FCF, applied to a 2028 EBITDA base approaching $9 billion as the excluded catalysts begin contributing, implies normalized annual FCF of approximately $5.4 billion, or an 11.4% yield on today's market cap before any re-rating occurs.
We are buyers of VST at today's price (notwithstanding the aforementioned technical caveats).
The Haymaker Team
(Highlighted cells indicate today's updates.)
Buys [TABLE IMAGE — not OCR'd] Note: DVN added, along with earlier WDOFF recommendation, for visibility.
Holds / Trims [TABLE IMAGE — not OCR'd]
Sells [TABLE IMAGE — not OCR'd] Note: We've revised the overall % Change formula to more directly indicate simple price movement.