Evergy, Inc.
Analysis
Evergy has turned a 15-gigawatt wish list into signed contracts with minimum bills, and is now spending years ahead of the money those customers pay. The growth is contracted; only the timing is still a bet. How does the cost of this build compare with the cash those contracts pay?
- The data-centre pipeline became signed contracts.
Management went from describing a queue of customers to five signed service agreements covering 3 gigawatts, each with a minimum monthly bill that pays whether or not the power is used. The growth is now contracted, not forecast. How much of the 3 gigawatts is billing customers today?
- Management has raised its own growth targets twice in nine months.
Evergy's invested assets are now expected to grow about 12% a year, and the earnings target moved up to 6% to 8% plus. Those are targets it has never hit, and 2025 showed how easily weather and weak demand pull a year off course.
- The spending lands years before the customers do.
Free cash flow is negative and $700 million to $900 million of new shares are planned every year through 2029. The costs land now and the sales arrive after 2030, so the next few years look worse than the business really is. How much equity will Evergy still need to raise before 2030?
- Contracted data center loadThe bull case is that signed long-term contracts with data center customers convert a speculative pipeline into predictable load and revenue.
- Rate base investment growthBecause the company earns a return on infrastructure it builds, faster load growth lets it enlarge its asset base and spread fixed costs over more sales.
- Affordability and rate designManagement argues that keeping rates below regional averages and charging new large customers a premium keeps regulators and existing customers onside.
- Equity funding needsThe bear case is that the construction required to serve this load is funded partly by selling new shares, which spreads the same profit over more owners.
- Weather and industrial demandEarnings have repeatedly slipped on mild weather and weak industrial usage, and much of the growth outlook depends on customers ramping on schedule.
- Rate case dependenceGrowth also depends on rate case outcomes and on a few hyperscale tenants whose construction schedules and credit the company does not control.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Purchase | ≥$1K | May 15 | Jul 1 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Mar 23 | May 13 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Mar 12 | May 13 |
Ro Khanna Democratic · House · CA-17 | Purchase | ≥$1K | Jan 29 | Feb 6 |
Dan Newhouse Republican · House · WA-4 | Sale | ≥$1K | Apr 11 | May 16 |
Congressional trading data provided by QuiverQuant
How Evergy turned $2.6B of revenue into $678.8M of operating income.
| Revenue | ||
|---|---|---|
| Electric Utility Segment | $2.7B | ▲ 1.20% YoY |
| Total revenue | $2.6B | |
| Gross profit | $858.3M | 33.4% |
| Operating income | $678.8M | 26.4% |