Is There An Opportunity With Evergy, Inc.'s (NASDAQ:EVRG) 22% Undervaluation?

Simply Wall St.11-27

Key Insights The projected fair value for Evergy is US$82.53 based on Dividend Discount Model Evergy's US$64.49 share price signals that it might be 22% undervalued Analyst price target for ...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs There An Opportunity With Evergy, Inc.'s (NASDAQ:EVRG) 22% Undervaluation?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-27 02:24 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/opportunity-evergy-inc-nasdaq-evrg-182435803.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n The projected fair value for Evergy is US$82.53 based on Dividend Discount Model \n Evergy's US$64.49 share price signals that it might be 22% undervalued \n  Analyst price target for ...</p>\n\n<a href=\"https://finance.yahoo.com/news/opportunity-evergy-inc-nasdaq-evrg-182435803.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NDAQ","symbol_name":"纳斯达克OMX交易所","start_time":0,"source_url":"https://finance.yahoo.com/news/opportunity-evergy-inc-nasdaq-evrg-182435803.html","article_id":"2486804018","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/vufsA66WUrIdn1cTA_PBdw--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/8825248dd2026431674a1820f2d9889e"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2486804018","pubTimestamp":1732645475,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"The projected fair value for Evergy is US$82.53 based on Dividend Discount Model. Evergy's US$64.49 share price signals that it might be 22% undervalued. Analyst price target for EVRG is US$64.66 which is 22% below our fair value estimate. How far off is Evergy, Inc.  from its intrinsic value?The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Evergy as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital  which accounts for debt. In this calculation we've used 5.9%, which is based on a levered","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"NDAQ":"纳斯达克OMX交易所","IE00B64PRP62.GBP":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (GBP) ACC","BK4112":"金融交易所和数据","IE00B3QW5Z07.USD":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (USD) ACC","IE00BGHQF748.EUR":"GUINNESS GLOBAL MONEY MANAGERS \"C\" (EUR) ACC","PSQ":"纳指反向ETF","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","QLD":"纳指两倍做多ETF","BK4213":"石油与天然气的勘探与生产","SQQQ":"纳指三倍做空ETF","BK4585":"ETF&股票定投概念","BK4534":"瑞士信贷持仓",".IXIC":"NASDAQ Composite","GDP":"古德里奇","BK4081":"电力公用事业","TQQQ":"纳指三倍做多ETF","BK4588":"碎股","EVRG":"西星能源","LU2095319765.USD":"Natixis Thematics Subscription Economy R/A USD","QID":"纳指两倍做空ETF","LU2210150020.SGD":"Natixis Thematics Subscription Economy R/A SGD","IE00BKPKM429.USD":"NEUBERGER BERMAN GLOBAL SUSTAINABLE EQUITY \"A\" (USD) ACC","LU2210149790.SGD":"Natixis Thematics Subscription Economy R/A SGD-H"},"translate_title":"Evergy，Inc.（纳斯达克股票代码：EVRG）被低估22%是否存在机会？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NDAQ":1,"DCF":1,"EVRG":1,"GDP":1,".IXIC":1,"TQQQ":0.6,"SQQQ":0.6,"QLD":0.6,"QID":0.6,"PSQ":0.6,"NQmain":0.6,"MNQmain":0.6},"content_text":"Key Insights\n\n The projected fair value for Evergy is US$82.53 based on Dividend Discount Model \n Evergy's US$64.49 share price signals that it might be 22% undervalued \n  Analyst price target for EVRG is US$64.66 which is 22% below our fair value estimate \n\n How far off is Evergy, Inc. (NASDAQ:EVRG) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the forecast future cash flows of the company and discounting them back to today's value. This will be done using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward. \n Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. \n See our latest analysis for Evergy \n The Method \n We have to calculate the value of Evergy slightly differently to other stocks because it is a electric utilities company. Instead of using free cash flows, which are hard to estimate and often not reported by analysts in this industry, dividends per share (DPS) payments are used. This often underestimates the value of a stock, but it can still be good as a comparison to competitors. The 'Gordon Growth Model' is used, which simply assumes that dividend payments will continue to increase at a sustainable growth rate forever. For a number of reasons a very conservative growth rate is used that cannot exceed that of a company's Gross Domestic Product (GDP). In this case we used the 5-year average of the 10-year government bond yield (2.6%). The expected dividend per share is then discounted to today's value at a cost of equity of 5.9%. Relative to the current share price of US$64.5, the company appears a touch undervalued at a 22% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. \nValue Per Share = Expected Dividend Per Share / (Discount Rate - Perpetual Growth Rate)\n= US$2.8 / (5.9% – 2.6%)\n= US$82.5\n\n\n\n  NasdaqGS:EVRG Discounted Cash Flow November 26th 2024\n \n\n The Assumptions \n The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Evergy as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 5.9%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. \nSWOT Analysis for Evergy\n\n\nStrength\n\nEarnings growth over the past year exceeded the industry.\n\n\nSee EVRG's revenue and earnings trends.\n\n\n\nWeakness\n\nInterest payments on debt are not well covered.\n\n\nDividend is low compared to the top 25% of dividend payers in the Electric Utilities market.\n\n\n\nOpportunity\n\nAnnual earnings are forecast to grow for the next 3 years.\n\n\nGood value based on P/E ratio and estimated fair value.\n\n\n\nThreat\n\nDebt is not well covered by operating cash flow.\n\n\nPaying a dividend but company has no free cash flows.\n\n\n Annual earnings are forecast to grow slower than the American market.\n\n\nIs EVRG well equipped to handle threats?\n\n\n\n Looking Ahead: \n Whilst important, the DCF calculation shouldn't be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to \"what assumptions need to be true for this stock to be under/overvalued?\" For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. What is the reason for the share price sitting below the intrinsic value? For Evergy, we've put together three fundamental items you should look at: \n\n Risks: To that end, you should learn about the   3 warning signs  we've spotted with Evergy (including 1 which can't be ignored) . \n Future Earnings: How does EVRG's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. \n Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! \n\n PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.\nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2486804018"}