Vistra (VST) Q3 2026 earnings review
Vistra raises its 2027 profit plan, but debt costs rise
Vistra's power plants cashed in on record summer heat across Texas and the eastern US while closing a major gas acquisition. Ongoing cash profit jumped 50% from a year ago to $2.4 billion, helped by last year's Lotus gas plant purchase and the restart of a coal unit in Texas. Chief executive Jim Burke raised the 2026 outlook and set a formal 2027 cash profit plan centered at $8.1 billion, though by our math the 2026 plan leaves fourth-quarter profit down 5%.
| Ongoing cash profit (Adjusted EBITDA) | $2,378M +50.4% from a year ago |
|---|---|
| Operating revenue | $6,347M +27.7% from a year ago |
| 2026 cash profit outlook | Raised $100M middle of the range: $7.3B (+23.5%) |
| 2027 cash profit outlook | $7.7B–$8.5B middle of the range up $500M from prior target |
⚖️ Verdict: 🟢 Bullish
The story got better because the power generator closed its 5,500-megawatt Cogentrix gas deal, locked in prices on 98% of its 2027 electricity output, and lifted its 2027 profit target by $500 million. One caution: paying for the acquisition and redeeming preferred stock pushed 2027 interest payments up by $262 million, so the share of profit turning into cash drops below Vistra's 60% goal, and the company took a $269 million write-down on its Moss Landing battery in California.
The question now is how much of Vistra's profit jump comes from repeatable long-term contracts versus one-time acquisition boosts and summer heat. If new nuclear and gas contracts drive the next leg, profit will keep climbing even as acquisition comparisons toughen; if acquired plants and capacity prices did the work, growth will slow after 2027. Fourth-quarter segment results, where the Lotus gas plants sit in both periods, will give the first clean read.
🐂 Bull Case
New 2027 Outlook Adds $500 Million
Vistra tracks its core performance using Ongoing Operations Adjusted EBITDA, which is cash profit from its power plants and retail business before one-off items and closed sites. For four quarters, the Texas power producer held its preliminary 2027 target at $7.4 billion to $7.8 billion because that figure left out its pending Cogentrix gas plant purchase and new nuclear contracts.
The utility closed the Cogentrix deal in October, adding 5,500 megawatts of natural gas power capacity, and issued its formal 2027 plan at $7.7 billion to $8.5 billion. That lifts the middle of the range by $500 million, or 11% above the raised 2026 plan, while Vistra also locked in prices on 98% of its expected 2027 electricity output and 78% for 2028.
What to watch: the 2028 hedging percentage in the fourth-quarter report. A rise above 85% would show Vistra is locking in multi-year power prices before any slowdown in data-center building can hurt open market rates.
Acquisitions and Outage Recovery Lifted Summer Profit
"Through one of the hottest calendar third quarters on record, our generation team kept the fleet running safely and reliably," chief executive Jim Burke said. Peak summer heat pushed electricity demand to all-time highs in July across both ERCOT, the Texas grid, and PJM, the mid-Atlantic and Midwest grid, while Vistra kept nearly 95% of its power plants available to run.
- Ongoing cash profit: $2,378 million, up 50.4% from a year ago
- Texas segment cash profit: $1,227 million, up 56.5% from a year ago
- East segment cash profit: $979 million, up 36.2% from a year ago
- Retail segment cash profit: $98 million, up 164.9% from a year ago
Hot weather was not the only driver. Vistra said the $797 million profit jump also came from "higher realized energy and capacity prices, three months' contribution from the plants acquired from Lotus, and the return of Martin Lake Unit 1 to operational status". Because the Lotus gas plants closed last November, the fourth quarter will test growth on a like-for-like basis.
What to watch: fourth-quarter East segment cash profit against last year's $631 million. That reading will show how much earnings power improved once the Lotus acquisition is in both periods.
Long-Term Power Contracts Keep Expanding
Vistra has been shifting its power plants from open-market electricity sales to 20-year power purchase agreements, which are long-term supply contracts with big technology companies. Before this quarter, the company had already signed nuclear power deals with Amazon Web Services in Texas and Meta Platforms in the East.
This quarter the power generator extended that contract model to its natural gas and solar sites. It signed a 20-year deal for 207 megawatts with New Era Energy and Digital at its Odessa gas plant in Texas, and started commercial operations at its 405-megawatt Pulaski solar farm in Illinois under a contract with Microsoft. Long-term contracts reduce Vistra's reliance on volatile wholesale electricity prices.
What to watch: confirmation in the fourth-quarter report that initial power deliveries under the Meta nuclear contracts started on schedule in late 2026, which triggers their first cash contribution for 2027.
Board Adds $1.5 Billion to Buybacks
Since November 2021, Vistra has bought back $6.7 billion of its own stock and cut its share count by about 30%. By early August, the remaining buyback budget was down to $1.2 billion, and the company spent $208 million on share repurchases during the third quarter by our math.
The board approved another $1.5 billion for buybacks, lifting the total available budget to about $2.5 billion through the end of 2028. However, total shares outstanding ticked up from 336 million in August to 339 million on November 2 because Vistra issued shares to help pay for the Cogentrix acquisition, so the new buyback money must first offset that deal dilution.
What to watch: the exact share count in the year-end report, which will show how quickly Vistra retires the shares issued for the Cogentrix purchase.
🐻 Bear Case
Higher Interest Costs Eat Into 2027 Cash
Vistra aims to turn at least 60% of its ongoing cash profit into Ongoing Operations Adjusted FCFbG, which is free cash flow before spending on new growth projects. For 2026, the raised outlook hits a 61.6% rate by our math, converting $7.3 billion of cash profit into $4.5 billion of pre-growth cash flow at the middle of the ranges.
In the new 2027 plan, that cash conversion drops to 58.0% by our math, below the company's 60% target. While the middle of the 2027 cash profit outlook rises by $800 million from 2026, pre-growth free cash flow rises by only $200 million. In October and November, Vistra paid $2.2 billion in cash for Cogentrix, paid off $1.7 billion of assumed debt, and redeemed $1 billion of preferred stock, cutting its available liquidity from $8.9 billion to $5.4 billion and pushing 2027 net interest payments up by $262 million to $1,353 million.
What to watch: the net debt to cash profit ratio in the full-year filing. A reading above Vistra's 2.3x target for late 2027 would show the acquisition debt is slowing balance-sheet repair.
Vistra Writes Down Moss Landing Battery Again
Vistra has faced repeated repair costs and outages at its Moss Landing battery storage site in California, and the future of its 350-megawatt battery unit there was already in doubt after cleanup estimates rose last quarter. Management excludes these cleanup costs from its headline ongoing cash profit.
This quarter Vistra booked a $269 million asset write-down in its West segment for "the partial impairment of the Moss Landing 350 facility", which took 4.2 percentage points off operating margin by our math. The company also added back $60 million of decommissioning and Moss Landing cleanup expenses to reach its adjusted profit number, proving the California battery problems are still draining value.
What to watch: the property and equipment footnote in the quarterly filing, which will show how much book value remains at risk on the Moss Landing battery units.
Risks this quarter didn't answer
Four standing concerns from prior quarters received no new figures in the third-quarter earnings release.
- Unhedged 2028 power prices: 22% of expected 2028 output remains open to wholesale market swings; the quarterly filing's segment hedge table will show which regions carry the exposure.
- Grid rule changes in PJM and Texas: rules on connecting large data centers and setting capacity auctions remain unsettled; federal and state regulatory rulings will decide the outcome.
- Nuclear tax credit rules: federal rules on how power contracts count toward nuclear tax credit limits are still pending; final Treasury regulations will settle the accounting.
- Texas retail customer trends: the release gives no customer count or volume split to separate mild weather from lost customers; the quarterly filing's retail volume table will show whether Texas sales volumes kept falling.
💲 Other KPIs
Operating revenues grew 27.7% from a year ago and 58.0% from last quarter, reversing a 5.5% drop in the second quarter. Fuel, purchased power and delivery costs rose only 6.8% to $2,530 million, so gross profit after fuel costs expanded by 7.8 percentage points of revenue by our math, helped by $559 million of paper gains on future power hedges.
By our math, third-quarter operating cash flow rose 43.7% from $1,467 million a year ago, bringing the nine-month total to $4,330 million. Capital spending on power plants and nuclear fuel took $747 million in the quarter, or 11.8% of revenue, leaving $1,361 million of standard free cash flow by our math, up 35.1% from last year.
Reported net profit rose 74.8% from $652 million a year ago, rebounding from a 6.7% decline in the second quarter. The swing was driven by $559 million of unrealized gains on commodity hedges that settle in future years, which more than offset the $269 million Moss Landing write-down and a 1.9-point rise in depreciation expense to 11.2% of revenue.
🔮 Guidance
Raised. Vistra lifted the middle of its 2026 ongoing cash profit plan by $100 million to $7.3 billion, or 23.5% growth for the year, after holding the range unchanged for four straight quarters. By our math, subtracting nine-month results of $5,639 million leaves $1,661 million for the fourth quarter, down 4.6% from a year ago now that the Lotus gas plants are in both periods.
Raised. The power company boosted the middle of its 2026 pre-growth free cash flow target by $175 million to $4.5 billion, which represents 25.3% growth over 2025. The higher cash outlook comes from the $100 million profit raise and $100 million of property damage insurance proceeds from the 2024 Martin Lake plant incident.
Cut. In its reconciliation tables, Vistra lowered the middle of its full-year operating cash flow forecast by $313 million to $5,920 million because of working capital and margin deposit swings. By our math, that leaves $1,590 million for the fourth quarter, up 11.0% from the fourth quarter of 2025.
Raised. The middle of the full-year net profit plan moved up by $805 million to $4,130 million. The increase reflects $1,956 million of full-year paper gains on commodity hedges marked to market curves on November 2.
Raised. Turning its earlier preliminary target into formal 2027 plans, the utility lifted the middle of the range by $500 million to $8.1 billion, or 11.0% growth over the 2026 midpoint. The new range includes the 5,500 megawatts of Cogentrix gas plants acquired in October and initial deliveries under the Meta nuclear contracts, with 98% of expected 2027 generation already hedged.
New. Management set its first formal 2027 pre-growth free cash flow range with a middle of $4.7 billion, up 4.4% from the 2026 plan midpoint. Cash flow grows more slowly than the 11.0% cash profit increase because net interest payments rise to $1,353 million and maintenance and nuclear fuel capital spending increases to $1,750 million.
❓ Key Questions
How much did Cogentrix add to 2027 versus power curves?
Management previously suggested the Cogentrix gas plants and Meta nuclear deals could add $700 million to $750 million in 2027, but the midpoint rose by $500 million. Investors need to know whether lower wholesale power prices offset part of the deal gains.
Is the $22 to $25 cash flow per share target intact?
At the end of 2025, Vistra outlined a path to $22 to $25 of pre-growth free cash flow per share by 2030, but has not repeated it for three quarters. With 2027 cash conversion dipping to 58%, does that long-term goal still stand?
What is the remaining exposure at Moss Landing 350?
Vistra took a $269 million partial write-down on the 350-megawatt Moss Landing battery facility in California. Management has not said whether the damaged battery unit will ever restart or if the remaining book value could be written off too.
Did Texas retail electricity volumes keep falling in Q3?
Retail segment cash profit jumped to $98 million from $37 million a year ago, but the press release gives no customer counts or electricity volumes. In the first half of 2026, Texas retail volumes fell nearly 10%.