Evergy Inc.
EVRG
provides clean, safe and reliable energy to 1.6 million customers in Kansas as well as Missouri. The company will benefit from planned capital investments, focus on clean energy generation, strategic partnerships and efficient cost management.
This Zacks Rank #3 (Hold) stock delivered an average earnings surprise of 19.2% in the last four quarters. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Tailwinds
Evergy plans to invest $9.2 billion in the 2021-2025 time period and expects annual earnings to witness a 6-8% CAGR through the 2019-2024 period, which will have a positive impact on its overall performance and earnings. Out of the planned expenditure, $5.9 billion will be invested toward upgrades to transmission and distribution infrastructure as well as customer-facing platforms to improve reliability.
Despite the COVID-19 crisis, Evergy — through the new Integrated Resource Plan — aims to achieve net-zero emissions by 2045. The company has already lowered emissions from its units by 50% by 2020 from 2005 levels. Evergy is also focused on cost management across all facets of operations to achieve top-tier performance, which will further boost margins.
The company has already started to expand the existing operations through partnerships and collaborations. Evergy formed a joint venture with
American Electric Power
AEP
, named Transource Energy, which will be focused on a developing competitive transmission project named Transource Energy, LLC. Total project portfolio will be more than $600 million, with Evergy having a 13.5% interest in the venture. These projects are well poised for sustainable and long-term growth in the transmission market.
Headwinds
The company has significant capital projects that are pending. The projects may get delayed due to permit delays, inadequate availability or increased cost of equipment and materials, which are beyond its control, thereby increasing the cost of the projects and adversely impacting profitability.
Performance of the company depends on a large extent on the outcome of retail rate proceedings in Kansas and Missouri. Failure to timely recover full investment costs of capital projects could have a material impact on the business.
Price Performance
In the past 12 months, Evergy’s shares have gained 29.9% compared with the
industry
’s growth of 13.3%.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some better-ranked stocks in the same sector include
TotalEnergies SE
TTE
, and
Chesapeake Energy Corporation
CHK
. TotalEnergies and Chesapeake Energy currently sport a Zacks Rank of 1.
TotalEnergies, and Chesapeake Energy delivered an average earnings surprise of 75.4%, and 13.3% respectively.
The Zacks Consensus Estimate for 2021 earnings for TotalEnergies, and Chesapeake Energy has moved up 8.1%, and 26.4% respectively, in the past 60 days.
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