Valuation Scorecard: Stock Rating C-Neutral (2/27/24)-Avista Corp (AVA).

At the current price of $34, what is the market’s view of Avista’s future operating performance? To achieve average annual stock market performance of 9.0% over the next 6 years, Avista shares will need to reach $57. Upper quartile performance will require a $67 Avista stock price by 2029.

Executive Summary

• Price Target Research identifies Avista as having: average profitability, instability, very low expected growth, and low financial strength.
• Very low valuation, below market shareholder returns. Current valuation levels are very low relative to the Avista Peer Group. Recent market returns have underperformed the Avista Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, Avista shares should reach a level of $55 by 2029 — an 13.1% per year total shareholder return. A 2029 stock price of $57 would reflect median performance and a price of $67 would be required to reach upper quartile performance.
• Avista’s achieved growth is slightly below average. Historical growth has been below average relative to the Avista Peer Group and forecasted growth is relatively very low. Asset Growth, and Equity Growth have lagged. These factors have negatively affected market perceptions of Avista. Avista’s historical income statement growth has been in line with balance sheet growth. Revenue growth has paralleled asset growth; earnings growth has paralleled equity growth and return on equity has been stable. Avista’s consensus growth expectations are in line with past growth.
• Profitability is slightly below average. The company has very low cash and will have to work to generate attractive investments and improve valuation.
• Avista’s risk profile is neutral. Overall variability has been very low with very low revenue variability, only average E.P.S. variability, and only average stock price volatility. Financial Strength is very low and earnings’ expectations are very low. The debt/capital ratio has been relatively steady.

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