Evergy Inc (EVRG, Financial) has seen a daily loss of 2.66% and a 3-month loss of 1.73%. Despite these losses, the company's Earnings Per Share (EPS) stands at 3.29. This raises a crucial question: Is the stock modestly undervalued? In this article, we'll delve into a valuation analysis to answer this question and provide you with a comprehensive understanding of Evergy's intrinsic value. Read on to explore this intriguing financial journey.
A Brief Overview of Evergy Inc (EVRG, Financial)
Evergy is a regulated electric utility serving eastern Kansas and western Missouri. Its major operating subsidiaries include Evergy Metro, Evergy Kansas Central, Evergy Missouri West, and Evergy Transmission Co. The utility has a combined rate base of approximately $18 billion, roughly half in Kansas and the rest split between Missouri and federal jurisdiction. Evergy is one of the largest wind energy suppliers in the U.S.
As of August 30, 2023, Evergy's stock price stands at $55.56, while the GF Value, an estimation of fair value, is $64.38. This comparison suggests that the stock might be modestly undervalued. Let's delve deeper into this analysis.
Understanding the GF Value
The GF Value is a proprietary measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. This GF Value Line provides an overview of the fair value at which the stock should ideally be traded.
The stock of Evergy (EVRG, Financial) is believed to be modestly undervalued, according to GuruFocus Value calculation. With its current price of $55.56 per share and a market cap of $12.80 billion, Evergy's stock is predicted to offer higher long-term returns than its business growth due to its relative undervaluation.
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Evergy's Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss for investors. Evergy has a cash-to-debt ratio of 0, which ranks worse than 0% of 484 companies in the Utilities - Regulated industry. The overall financial strength of Evergy is 3 out of 10, indicating poor financial strength.
Profitability and Growth
Consistent profitability over the long term offers less risk for investors. Evergy has been profitable 10 over the past 10 years. Its operating margin is 22.76%, which ranks better than 77.45% of 501 companies in the Utilities - Regulated industry. Overall, the profitability of Evergy is ranked 8 out of 10, indicating strong profitability.
Growth is a critical factor in the valuation of a company. The 3-year average annual revenue growth rate of Evergy is 5.8%, which ranks worse than 60.21% of 485 companies in the Utilities - Regulated industry. The 3-year average EBITDA growth rate is 3.5%, which ranks worse than 52.17% of 460 companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) and the weighted cost of capital (WACC) provides insight into its profitability. For the past 12 months, Evergy's ROIC is 4.14, and its WACC is 5.08.
Conclusion
Overall, Evergy (EVRG, Financial) stock is believed to be modestly undervalued. The company's financial condition is poor, and its profitability is strong. Its growth ranks worse than 52.17% of 460 companies in the Utilities - Regulated industry. To learn more about Evergy stock, you can check out its 30-Year Financials here.
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