Evergy, Inc. (EVRG)

Conclusion

Evergy, Inc. is a US regulated electric utility, headquartered in Kansas City, Missouri. It generates, transmits, distributes and sells electricity to residences, businesses, industrials and municipalities. At a price of 87.99 USD on 2026-11-09, the company has a market capitalisation of 20.63 billion USD and an enterprise value of 36.84 billion USD.

The verdict is fair. The fair value band runs from 60.37 to 90.55 USD with a midpoint of 75.46 USD, which is the fair value from historical multiples, giving a margin of safety of -14.2% at the current price. Today's multiples sit mixed against their own ten-year medians: the price-to-earnings ratio is 19.4 against a median of 20.7, while enterprise value to EBITDA is 12.2 against 11.3 and the price-to-book ratio is 1.87 against 1.57. A discounted cash flow value per share and a reverse DCF are not available, because free cash flow is negative. The growth the market expects therefore cannot be set against delivered growth. Delivered EPS growth over five years is 6.2%, and analysts expect 4.1% next year.

Two strengths hold the case up: an operating margin of 27.2% against a ten-year median of 24.6%, and a net margin of 16.7%. Two weak numbers could break it: net debt to EBITDA of 5.37x and interest coverage of 2.68x. Trailing free cash flow conversion of -145.3% and an Altman Z-score of 0.88 add to the pressure on the balance sheet.

Financial health

Financial health is red, held back by four weak readings: a current ratio of 0.49, net debt to EBITDA of 5.37x, interest coverage of 2.68x, and an Altman Z-score of 0.88. The quick ratio is 0.21 and debt to equity is 1.47. The Altman model was designed for manufacturers, and Evergy is a utility, so its zone of distress should be read with that limit in mind. Insolvency risk is low, about 1.6% by the estimate of the Ohlson model over one to two years, based on year-end 2025 figures. That estimate contrasts with the weak leverage and liquidity ratios above, which the reader should weigh alongside it.

Earnings quality

Earnings quality is red, because free cash flow conversion is weak and the company's cash generation does not keep pace with reported profit. Trailing conversion is -145.3%, and the five-year average is -59.7%. The accrual ratio is -0.0351, which is a supportive sign. Stock-based compensation is 0.37% of revenue, and free cash flow after it is -1.57 billion USD. The share count has grown at 0.53% a year over five years, so there have been no net buybacks. The Piotroski score is 3 out of 9. The Beneish M-score is not available. Over the last eight quarters the company beat estimates four times and missed four times, with an average surprise of -1.3%. Current-year estimates have been revised up over 90 days by 3.0%, with seven upgrades and one downgrade in the last 30 days.

Profitability

Profitability is green. The gross margin is 50.0% against a ten-year median of 31.4%, the operating margin is 27.2% against 24.6%, and the net margin is 16.7% against 13.2%. Operating margin stability is 6.3%. Return on invested capital is 6.4%, against a weighted average cost of capital of 7.1%, a neutral gap of -0.72%. Return on equity is 9.7%, but leverage props it up: the DuPont split at year-end 2025 shows a net margin of 14.5%, an asset turnover of 0.17 and an equity multiplier of 3.47. Returns on capital therefore barely cover the cost of capital, and the equity return depends on heavy borrowing.

Growth

Growth is yellow. Revenue compounded at 0.3% over three years, 3.8% over five years and 9.2% over ten years. EPS compounded at 3.9% over three years, 6.2% over five years and 5.7% over ten years. Revenue grew in 8 of the 10 comparable years. Analysts expect EPS growth of 4.1% next year, and the 90-day change in that estimate is 0.1%, with no upgrades and two downgrades in the last 30 days. Recent growth is slower than the longer-term record, so the rate of expansion is the open question.

Valuation

Valuation is yellow, with a verdict of fair. The price-to-earnings ratio is 19.4 against a ten-year median of 20.7, a discount of 6.4%. Enterprise value to EBITDA is 12.2 against 11.3, a premium of 8.0%. Price to sales is 3.24 against 2.75, a premium of 18.0%, and price to book is 1.87 against 1.57, a premium of 19.3%. Free cash flow yield is -7.5% and earnings yield is 5.2%. The discounted cash flow value per share is not available. The model uses a discount rate of 8.9% and a terminal growth rate of 2.5%, but negative free cash flow of -1.57 billion USD gives no usable starting point. The fair value band is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth. It is not a price target. The dividend yield is 3.06%, with a forward yield of 3.3%. Dividend payout cannot be measured against free cash flow because that figure is negative.

Risks

The largest risk is leverage. Net debt to EBITDA of 5.37x and interest coverage of 2.68x mean that a fall in earnings or a rise in borrowing costs would absorb a large share of operating profit. A current ratio of 0.49 means short-term obligations exceed liquid assets, so the company depends on continued access to credit. Negative free cash flow means capital spending and dividends are funded from outside the business, and the dividend would be hard to sustain if that continues. A weak earnings record, with four misses in eight quarters, reduces confidence in reported profit. Several values are not available: the discounted cash flow value per share, the reverse DCF, the Beneish M-score and the price-to-free-cash-flow median. This analysis also has no debt maturity schedule and no revenue split by segment, so refinancing risk and the mix of regulated and other activities cannot be assessed.