Value
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.5 |
| P/S | 8.0 |
| EV/EBITDA | 4.1 |
| Fwd P/E | 6.6 |
| PEG | 4.1 |
| Analyst target | 3.0 |
- ▸Forward P/E: 19.4x
- ▸PEG: 2.45
EVRG · Why this verdict
Why Evergy (EVRG) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.0/10
ConfidenceHIGH
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Approximately 60% of revenues and regulatory oversight both reside in a single state, meaning any adverse rate case or unfavorable regulatory development in that jurisdiction carries an outsized impact on total cash flows with no meaningful diversification buffer. Bear case | Constructive rate case outcomes in the home state preserve the current allowed return environment over the next 12 months, limiting the realized impact of this concentration. | →Stable |
| CounterA concentrated regulatory footprint can produce more consistent and predictable outcomes through a deeper working relationship with a single regulator, and multiple high and medium-severity concentration risks may already be appropriately sized into the market's valuation. | ||
Despite reporting positive net income, free cash flow is deeply negative at approximately 125% below net income, meaning reported earnings are not translating into distributable cash and raising serious questions about the capacity to fund the dividend and capital obligations simultaneously. Quality breakdown | Free cash flow relative to net income rises above 0% over the next 12 months, confirming the earnings base is converting into cash. | →Stable |
| CounterAs a regulated electric utility, the business earns revenues from a state-approved rate base, and the Piotroski F-Score of 7 out of 9 suggests that broader financial health markers remain intact despite the cash flow shortfall. | ||
The dividend yield is elevated but the safety assessment explicitly flags it as potentially unsustainable; with free cash flow deeply negative, the distribution may eventually require external financing or a cut to maintain. Catalyst breakdown | Free cash flow turns positive and covers more than 100% of dividends paid within 12 months, removing the yield-trap classification. | →Stable |
| CounterRegulated utilities can sustain dividends through regulatory-approved rate recovery mechanisms even when free cash flow is temporarily negative, as state commissions set allowed returns with investor payouts as an explicit objective. | ||
The four most recent quarters produced an equal split of two beats and two misses with an average earnings surprise of approximately -1.5%, indicating an inconsistent execution track record that limits confidence in a sustained fundamental improvement trajectory. Earnings | EPS beats in at least 3 of the next 4 quarters with a positive average surprise, restoring confidence in management's ability to outperform expectations. | →Stable |
| CounterThe most recent quarter delivered a 13.8% positive earnings surprise, suggesting the execution cadence may be improving after the prior misses — if that momentum continues, the historical miss average may not be predictive. | ||
Approximately 60% of revenues and regulatory oversight both reside in a single state, meaning any adverse rate case or unfavorable regulatory development in that jurisdiction carries an outsized impact on total cash flows with no meaningful diversification buffer.
→StableBear case
- Expectation
- Constructive rate case outcomes in the home state preserve the current allowed return environment over the next 12 months, limiting the realized impact of this concentration.
CounterA concentrated regulatory footprint can produce more consistent and predictable outcomes through a deeper working relationship with a single regulator, and multiple high and medium-severity concentration risks may already be appropriately sized into the market's valuation.
Despite reporting positive net income, free cash flow is deeply negative at approximately 125% below net income, meaning reported earnings are not translating into distributable cash and raising serious questions about the capacity to fund the dividend and capital obligations simultaneously.
→StableQuality breakdown
- Expectation
- Free cash flow relative to net income rises above 0% over the next 12 months, confirming the earnings base is converting into cash.
CounterAs a regulated electric utility, the business earns revenues from a state-approved rate base, and the Piotroski F-Score of 7 out of 9 suggests that broader financial health markers remain intact despite the cash flow shortfall.
The dividend yield is elevated but the safety assessment explicitly flags it as potentially unsustainable; with free cash flow deeply negative, the distribution may eventually require external financing or a cut to maintain.
→StableCatalyst breakdown
- Expectation
- Free cash flow turns positive and covers more than 100% of dividends paid within 12 months, removing the yield-trap classification.
CounterRegulated utilities can sustain dividends through regulatory-approved rate recovery mechanisms even when free cash flow is temporarily negative, as state commissions set allowed returns with investor payouts as an explicit objective.
The four most recent quarters produced an equal split of two beats and two misses with an average earnings surprise of approximately -1.5%, indicating an inconsistent execution track record that limits confidence in a sustained fundamental improvement trajectory.
→StableEarnings
- Expectation
- EPS beats in at least 3 of the next 4 quarters with a positive average surprise, restoring confidence in management's ability to outperform expectations.
CounterThe most recent quarter delivered a 13.8% positive earnings surprise, suggesting the execution cadence may be improving after the prior misses — if that momentum continues, the historical miss average may not be predictive.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Evergy is a regulated electric utility where deeply negative free cash flow conversion, concentrated geographic and regulatory exposure to a single state, and a potentially unsustainable dividend combine to create an unattractive setup — compounded by the stock trading above its near-term price target with negative risk/reward.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.0 |
| ROA | 1.9 |
| Gross margin | 6.5 |
| Op margin | 8.8 |
| Net margin | 7.3 |
| Current ratio | 1.8 |
| FCF quality | 0.0 |
| Moat | 5.2 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -125% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
4.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.8 |
| EPS growth | 5.7 |
Momentum
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.3 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 1.5 |
- ▸Overbought (RSI 74)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 7.1 |
| Price target | 5.5 |
- ▸LLM news sentiment: +0.40 (n=1)
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $1,061,825 (0.005% of mkt cap)
Peer rank
3.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.0 |
| quality rank | 4.5 |
| growth rank | 3.1 |
Technical
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.3 |
| support resistance | 0.1 |
| 52w position | 10.0 |
Risk (lower is worse)
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.9 |
| days to cover | 2.3 |
| volatility | 8.6 |
| put call | 10.0 |
| implied vol | 5.0 |
| beta | 9.9 |
| debt equity | 3.9 |
- ▸Concentration risks: 2 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 1.8 |
| dividend safety | 4.2 |
| news activity | 5.0 |
- ▸Earnings concerns: 2B/2M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.2>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_BOOST:ANALYST:0.40
- EARNINGS_PROXIMITY:33d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.2=NEGATIVE
Warning (1)
- MOMENTUM:5.2<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-1.16
Upside
-10.3%
Downside
8.9%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 4.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 6.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.2=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.16 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 6.6, Risk (lower is worse) at 6.5, and Momentum at 5.2; the weakest are Technical at 3.5, Peer rank at 3.9, and Catalyst at 4.0. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.16 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Negative Free Cash Flow Conversion
Trip ifFree cash flow relative to net income rises above 0% for 2 consecutive quarters.
- P2Geographic Regulatory Concentration
Trip ifGeographic revenue concentration in a single state falls below 50% for 2 consecutive fiscal years.
- P3Dividend Yield Sustainability Risk
Trip ifFree cash flow covers more than 100% of dividends paid for 2 consecutive quarters.
- P4Inconsistent Earnings Delivery
Trip ifAverage EPS surprise rises above 5% for 2 consecutive quarters.