Avista – A Concise Overview of the Stock

Avista shares fell by -2.4% during the day's evening session, and are now trading at a price of $37.75. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.

Avista's Valuation Is in Line With Its Sector Averages:

Avista Corporation, together with its subsidiaries, operates as an electric and natural gas utility company. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 22.89 and an average price to book (P/B) ratio of 1.03. In contrast, Avista has a trailing 12 month P/E ratio of 20.3 and a P/B ratio of 1.19.

Avista's PEG ratio is 2.65, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:

2020-02-26 2021-02-24 2022-02-23 2023-02-22
Revenue (MM) $1,346 $1,322 $1,439 $1,710
Gross Margins 67.3% n/a n/a n/a
Operating Margins 17.1% 17.6% 15.9% 11.1%
Net Margins 14.64% 9.8% 10.24% 9.07%
Net Income (MM) $197 $129 $147 $155
Net Interest Expense (MM) -$104 -$105 -$106 -$119
Depreciation & Amort. (MM) -$206 -$224 -$232 -$253
Earnings Per Share $2.97 $1.9 $2.1 $1.86
EPS Growth n/a -36.03% 10.53% -11.43%
Diluted Shares (MM) 66 68 70 76
Free Cash Flow (MM) $841 $735 $707 $576
Capital Expenditures (MM) -$443 -$404 -$440 -$452
Net Current Assets (MM) -$3,838 -$4,028 -$4,264 -$4,361
Current Ratio 0.57 0.68 0.48 0.75
Long Term Debt (MM) $1,895 $2,060 $1,950 $2,333
Net Debt / EBITDA 4.46 4.98 5.2 5.14

Avista has growing revenues and a flat capital expenditure trend and a steady stream of strong cash flows. Additionally, the company's financial statements display wider gross margins than its peer group and average operating margins with a negative growth trend. However, the firm suffers from declining EPS growth and a highly leveraged balance sheet.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.