Avista , Ticker: AVA

1. Executive Summary

Ticker: AVA
Industry: Regulated Utilities – Electricity & Natural Gas
Investment Opinion:
- A stable dividend-paying utility stock with modest Buy/Hold appeal. Offers a ~5% yield and reliable earnings growth, though upside is limited. Well-suited for income-oriented portfolios.

Business Model: Avista operates through two segments—Avista Utilities (electric and gas distribution in WA, ID, OR) and AEL&P (electric utility in Alaska). (en.wikipedia.org)
Market Position: A mid-sized (S&P 600 component) regulated utility with ~780,000 combined customer connections across a 30,000 mi² service territory. (en.wikipedia.org)
Leadership: Heather Rosentrater serves as CEO; strong regulatory relations with recent settlements in Idaho and Oregon. (globenewswire.com)

Revenue & Profitability:
- 2024 revenue: ~$1.94B; Net income: ~$180M; TTM EPS: ~$2.28 (tipranks.com)
Margins:
- Gross profit ~60%, operating income ~15.7%, growing year-over-year.
Balance Sheet:
- Cash & short-term: ~$30M; Total assets: ~$7.94B; Total debt: ~$3.03B (net debt ~$39M) (tipranks.com)
Cash Flow & Investments:
- 2024 operating cash flow: ~$534M; free cash flow only ~~$1M due to heavy capex (~~$525M planned for 2025) (tipranks.com)

Recent Trends: Trading around $37.43, down slightly recently.
52‑Week Range: $33.45 – $43.09 (reuters.com)
Beta: ~0.93; exhibits typical utility stability with modest correlation to broader markets
Dividend: Quarterly dividend of $0.49/share (~$1.96 annually) equates to a ~5–5.25% yield. Declared regularly.

P/E: TTM ~16–18x, slightly below utility sector average (typically ~17–19x)
P/B & P/S: P/B ~1.13x; P/S ~1.54x — reasonable valuations for a regulated utility (reuters.com)
Yield: A 5%+ yield supports total return expectations in range of 7–9% annualized.

Regulated Environment: Revenue stability tied to rate-case settlements. Ongoing regulatory approvals in Idaho and Oregon favor earnings visibility. (globenewswire.com)
Infrastructure Growth: Significant gas pipeline replacement ($28M+ in 2025) and transmission investments support long-term stability. (myavista.com)
Macro Trends: Utilities benefit from steady demand, mild inflation, and low-growth environment.

Regulatory Risk: Adverse rate determinations could compress margins.
Capex Exposure: Large planned investments may require debt or equity issuance. Q1 guidance includes $120M debt issuance and up to $80M equity. (globenewswire.com)
Wildfire & Climate: Operational adjustments due to wildfire risks, though new regulatory frameworks may permit cost recovery.
Commodity Sensitivity: Electricity and natural gas price fluctuations can affect margins, unless fully passed through rates.

Rate Case Resolutions: Expected rate increases in Idaho and Oregon effective September 2025. (globenewswire.com, globenewswire.com)
Infrastructure Programs: Continued clean-energy and pipeline replacement investments drive long-term earnings. (myavista.com)
Regulatory Recovery Tools: New wildfire cost recovery mechanisms improve financial resilience.

Coverage: Mixed — average rating sits between Hold and Buy.
Price Targets: Implied 12-month range ~$40–$45 (targeting mid-single-digit yearly upside plus yield). (globenewswire.com)

Investment Thesis:
- A conservative income play with stable earnings, solid yield, and moderate earnings growth.
- Best suited for investors seeking dividend income and lower volatility in utility exposure.
Strategy:
- Buy on dip near $36–37; Hold for yield and income with rate case upside.
- Avoid large leveraged exposure due to capex and regulatory uncertainty.