Evergy, Inc.EVRGNASDAQ

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $202.86 per share(market-calibrated)

+140.3%

Upside to Fair Value

Current

$84.41

Pure Model

$221.83

Fair Value

$202.86

Bull Case

$281.02

Bear Case

$178.59

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

0.50%

Calibrated Growth

1.48%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $221.83.

What's Driving This Ratingfor EVRG

↓

CapEx normalizing toward maintenance

Historical CapEx is 39.21% of revenue (heavy investment phase). Model fades this to 5.00% by Year 10, freeing up ~$3.2B in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 28.72% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 5.12% revenue growth, fading to 2.00% by Year 10. Revenue reaches $9.4B (vs $5.9B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $272.67/share (29.1x terminal FCF) while exit multiple gives $170.99/share (18.6x terminal FCF). The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 150bps below the model's 2.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 86.00% indicates efficient cash generation. FCF reaches $3.8B by Year 10 (40.41% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.60

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)7.22%

Cost of Debt

Pre-tax Cost of Debt3.22%

Tax Rate5.00%

After-tax Cost of Debt3.05%

Equity Weight (E/V)55.76%

Debt Weight (D/V)44.24%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (55.76% × 7.22%) + (44.24% × 3.05%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$6.2B	$6.8B	$7.9B	$8.6B	$9.4B
EBIT	$1.8B	$2.0B	$2.3B	$2.5B	$2.7B
Tax	$89M	$98M	$113M	$124M	$135M
NOPAT	$1.7B	$1.9B	$2.1B	$2.4B	$2.6B
+ Depreciation	$1.1B	$1.2B	$1.4B	$1.6B	$1.7B
- Capex	$2.4B	$2.2B	$1.9B	$1.4B	$470M
- Δ NWC	$22M	$21M	$32M	$26M	$13M
Free Cash Flow	$373M	$933M	$1.7B	$2.5B	$3.8B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$353M	$794M	$1.3B	$1.7B	$2.2B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$3.8B

Terminal Growth Rate2.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$110.7B

PV of Terminal Value$64.8B

Exit Multiple Method

Year 10 EBITDA$4.4B

Exit Multiple (EV/EBITDA)16.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$70.7B

PV of Terminal Value$41.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$13.5B

PV of Terminal Value$64.8B

Enterprise Value$78.3B

(-) Net Debt$15.4B

Equity Value$62.9B

Shares Outstanding231M

Price per Share$272.67

Exit Multiple Method

PV of Projected FCFs$13.5B

PV of Terminal Value$41.4B

Enterprise Value$54.8B

(-) Net Debt$15.4B

Equity Value$39.4B

Shares Outstanding231M

Price per Share$170.99

Pure Model Fair Value

$221.83

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.00%	1.50%	2.00%	2.50%	3.00%
3.50%	$344.38	$404.84	$384.99	$366.08	$348.06
4.50%	$247.26	$273.66	$310.63	$366.08	$348.06
5.50%	$189.52	$203.65	$221.83	$246.07	$280.00
6.50%	$150.16	$158.66	$169.05	$182.04	$198.73
7.50%	$121.05	$126.56	$133.07	$140.89	$150.44

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$178.59

111.6% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.76

Base Case

$221.83

162.8% vs current

• Analyst consensus
• Terminal growth: 2.0%
• Beta: 0.60

Bull Case

$281.02

232.9% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.51

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Utilities Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth5.12%

Year 3 Revenue Growth4.53%

Year 5 Revenue Growth6.11%

Year 7 Revenue Growth4.46%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin28.72%

Tax Rate5.00%

Historical Capex / Rev39.21%

Terminal Capex / Rev5.00%

NWC / Revenue7.13%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 16x EV/EBITDA (Utilities sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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