Evergy (EVRG): Valuation Spotlight as Advanced Nuclear Partnership Signals Strategic Shift

Evergy's Strategic Move: Exploring Advanced Nuclear with TerraPower

Evergy (EVRG) just made headlines by partnering with TerraPower and the Kansas Department of Commerce, signing a memorandum of understanding to explore building a pioneering Natrium reactor and energy storage system in Kansas. This step does not guarantee a new plant, but it signals Evergy’s interest in advanced nuclear technologies that could help shape its long-term energy mix, jumpstart innovation, and even influence future regulatory treatment. For investors weighing what to do next, big strategic moves like this can prompt serious questions about what Evergy might look like a decade from now, and how those changes could play out in the company’s valuation.

Stock momentum reflects a market that likely sees more than just a speculative headline. Shares have climbed 24% in the past year, with a 19% gain since January and a gradual uptick across recent months. This comes during a period where Evergy’s operational returns have generally tracked industry averages, with investments growing but returns on capital remaining steady. Prior news around capital allocation and operational performance had already raised questions about future upside, and this latest alliance might signal a new direction.

After this rally and with a major partnership in play, is Evergy setting up for undervaluation or is the market already anticipating growth from this advanced nuclear bet?

Most Popular Narrative: 3.1% Undervalued

According to the most widely followed analyst narrative, Evergy shares are seen as slightly undervalued against consensus estimates. The narrative suggests the current price is just below what future earnings growth, margins, and capital deployment could justify.

Accelerated investment in grid modernization, new natural gas, and solar generation, backed by supportive state regulatory approvals and legislative mechanisms (such as PISA and CWIP), positions Evergy to efficiently deploy and recover capital, benefitting future net margins and regulated earnings.

Curious how Evergy could merit a premium valuation just shy of its latest highs? Analysts are making some bold growth calls, especially about future earnings momentum and capital returns. Want to see the underlying assumptions that are powering this upbeat forecast? Get the full story behind the numbers and discover which ingredients make this utility stock look undervalued right now.

Result: Fair Value of $75.60 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, any delays in large customer ramp-ups or unforeseen regulatory headwinds could quickly change this outlook. This could put pressure on Evergy’s growth and margins.

Find out about the key risks to this Evergy narrative.

Another View: Discounted Cash Flow Check

While analysts see Evergy as undervalued, our DCF model takes a more cautious stance and suggests that the shares could actually be trading above fair value right now. Could this fundamental difference shape your opinion?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Evergy for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Evergy Narrative

If you want to dig into the details or approach the data from a different angle, you can craft your own story in just a few minutes. Do it your way.

A great starting point for your Evergy research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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