Evergy, Inc. (EVRG) stock intrinsic value fair value estimate & owner earnings analysis

Evergy is a regulated electric utility holding company created in June 2018 by the merger of Westar Energy and Great Plains Energy (KCP&L). It sells electricity to about 1.7 million customers in Kansas and Missouri, with revenue near $6.0 billion in 2025 and net income of $856 million. Prices are set by state regulators, so earnings track how much plant the company is allowed to earn a return on. Only years since the merger are used, because earlier years describe a different, smaller company. The central issue is that Evergy spends more than its operations generate. In 2025 it produced $2.05 billion of operating cash flow but spent $2.80 billion on plant, and every year since 2021 spending has exceeded cash flow by a widening margin. We count only the part of spending tied to revenue growth as growth investment; the rest is treated as upkeep. On that basis, per-share owner earnings (cash flow, less working-capital swings, less stock compensation, less upkeep spending) were about $3.31 in 2019, near zero in 2020-2021, and negative from 2022 to 2025 (about -$1.46, -$2.10, -$1.70 and -$2.90). Working-capital swings were large in 2021 because of Winter Storm Uri fuel costs and were removed. Depreciation and other non-cash charges are already netted in cash flow, and no earnings adjustment was made for them. We tested whether the heavy spending should be viewed as profitable growth. Since 2019 Evergy has spent roughly $14 billion on plant against about $6.5 billion of depreciation, yet net income rose only from $670 million to $856 million, and revenue only from $5.15 billion to $5.96 billion. That is a return on net new investment of a few percent, below the 6% discount rate used here, and the spending is funded by new debt and shares (diluted shares rose from 227 million to 234 million) rather than by the company's own cash. We therefore give no credit for future growth in any case. Each case assumes the current cash flow continues flat, with no growth, because the regulated franchise is a structural feature of the business and nothing in the filings supports assuming more. The cases differ in how much annual spending is truly needed to keep the existing system running. Bear (about $10 per share): all spending outside revenue-linked growth is real upkeep, averaging about $1.9 billion a year over the period, leaving about $0.61 per share of owner earnings. Base (about $23 per share): upkeep sits midway between reported depreciation ($1.16 billion, a floor at historical cost) and that upkeep level, about $1.75 billion, leaving about $1.40 per share. Bull (about $65 per share): upkeep equals depreciation of $1.16 billion and the rate-base expansion pays back, leaving about $3.91 per share. This wide range reflects a judgement we could not resolve from the filings: how much of Evergy's capital program is replacement versus expansion. What would make this wrong: if regulators allow returns on the recent build-out that lift earnings materially (the base case would then be too low), or if the recent spending is largely discretionary and can be cut, which points toward the bull case. Not reconciled: fuel and materials inventory movements were not separately available, so some working-capital movement is unmeasured; a reconciliation of net income plus non-cash charges to cash flow was within roughly 1-8% each year, with the larger gaps in years of heavy construction. Leverage, which is significant for a utility, is reflected in the bear case rather than through a deduction from value. The margin-of-safety price is set well below the base case because of high uncertainty about upkeep spending and the negative recent trend.