Energy
PrivateA sleepy 1.5%-load Midwest regulated wire-and-pole utility that data centers turned into a 6-8%+ EPS-growth story — the load is contracted ($8.7B in minimum obligations), but at ~21.6x forward earnings and ~1.0x its own historical premium the upside is largely priced, and the binding constraint is Kansas/Missouri regulators' willingness to keep approving rate hikes faster than ratepayers revolt.
Research
The verdict
A sleepy 1.5%-load Midwest regulated wire-and-pole utility that data centers turned into a 6-8%+ EPS-growth story — the load is contracted ($8.7B in minimum obligations), but at ~21.6x forward earnings and ~1.0x its own historical premium the upside is largely priced, and the binding constraint is Kansas/Missouri regulators' willingness to keep approving rate hikes faster than ratepayers revolt.
Primary sources
Source documents — open to read in full
Evergy is a regulated electric utility holding company — incorporated in Missouri in 2017 out of the 2018 merger of Great Plains Energy and Westar Energy, HQ Kansas City, MO; Nasdaq: EVRG. It sells electricity to ~1.7 million customers across Kansas and Missouri through three integrated regulated operating utilities:
Plus equity-method transmission JVs: 13.5% of Transource (with AEP) and 50% of Prairie Wind (with AEP + Berkshire Hathaway Energy).
How it makes money: the classic regulated model — Evergy invests capital in generation, transmission and distribution ("rate base"), state regulators (KCC in Kansas, MPSC in Missouri) set rates that let it recover that capital plus an authorized return on equity of ~10.5% on a ~52% equity layer (the ROE requested in both the 2025 KCC and 2026 MPSC cases). Earnings grow by growing rate base. Fuel and purchased-power costs (~$1.4B/yr) pass through to customers via fuel-recovery mechanisms with minimal net-income impact — so the relevant top-line is "utility gross margin (non-GAAP)" of $4,111.2M in FY2025, not headline revenue.
Revenue mix by customer class (FY2025): Residential 37%, Commercial 33%, Industrial 11%, Wholesale 5%, Transmission 9%, Other 5%. Retail revenue $: Residential $2,198.6M, Commercial $1,950.5M, Industrial $649.9M.
Contract structure: historically month-to-month tariff billing. The structural change of the decade is the Large Load Power Service (LLPS) rate plans (approved KCC Nov 2025, MPSC Nov 2025) — 12-year terms for new loads >75 MW, minimum monthly bill = 80% of expected capacity demand, termination fees, and two years of collateral posted at signing. These convert data-center demand from speculative pipeline into contracted, take-or-pay-like backlog.
Upstream inputs → Evergy → end customer, with named stakeholders:
Fuel/energy upstream: coal, uranium (nuclear), natural gas, plus renewable PPAs and open-market power purchases. Fuel purchase commitments $1,369.2M and power commitments $668.0M (total, multi-year). Generation fleet ~15,800 MW owned + PPA capacity, including:
The grid: ~10,200 circuit-miles transmission; ~44,600 mi overhead + ~16,700 mi underground distribution. Operates inside the Southwest Power Pool (SPP) RTO — SPP network transmission costs ($438.0M FY2025) pass through to customers. New-generation supply chain runs through EPC contractors and turbine OEMs (CCGT turbines for the Viola/McNew plants).
Downstream / end customers (the chokepoint that flipped to a tailwind): retail residential + commercial + industrial in KS/MO. The named large-load buyers driving the thesis: Meta (data center, KC-area MO, operational 2025), Google, Panasonic ($4B De Soto, KS EV-battery plant, operational 2025), Beale Infrastructure. Single-source dependency risk is generation adequacy — SPP resource-adequacy rules force new build to serve the new load.
A regulated electric utility's moat is a legal monopoly franchise, not product differentiation. Evergy has "all material franchise rights necessary to sell electricity within its retail service territory" — no competitor can string a parallel wire to the same homes. The durable moats:
Bargaining power: over residential/commercial customers, near-total (monopoly). Over the regulator, weak-to-balanced — the binding constraint. Over large-load customers, improved via LLPS collateral + minimum-bill + termination protections, which shift the demand risk onto the data center, not the ratepayer or Evergy.
Evergy formally reports as one segment ("the Evergy Companies assess financial performance and allocate resources on a consolidated basis"). The economically meaningful split is by operating utility and customer class:
By operating utility (FY2025 operating revenue):
By customer class (FY2025 retail revenue + GWh):
| Class | Retail rev $M | Δ YoY | GWh | Δ GWh |
|---|---|---|---|---|
| Residential | 2,198.6 | +12.0 | 15,955 | +245 |
| Commercial | 1,950.5 | −13.2 | 18,676 | +401 |
| Industrial | 649.9 | −32.1 | 8,197 | −191 |
| Total retail | 4,844.7 | −30.9 | 42,919 | +445 |
The trend that defines the thesis: core retail revenue was flat-to-down in FY2025 (total retail −$30.9M), and industrial revenue and volume were declining (−$32.1M, −191 GWh). This is a mature, low-growth Midwest utility whose organic load was going sideways — until the data-center ESAs. The entire growth story is the bridge from this stagnant base to a 7–8% load-CAGR future. Transmission revenue (+$38.0M, to $520.6M) was the lone organic grower, driven by the Kansas Central FERC transmission formula rate.
Q1 FY2026 (qtr ended 2026-03-31, the latest print):
FY2025 (full year):
Balance-sheet flags: CFO $2,045.2M (vs $1,983.7M) — but capex $2,796.9M (vs $2,336.6M), so the firm is structurally FCF-negative and funds the gap with debt + equity. LT debt rose +$1,230.0M to $13,439.7M; cash on hand just $19.8M (runs on commercial paper + a $1.1B-available master credit facility). Capital structure 43% equity / 57% debt. Goodwill $2,336.6M (merger), tested, no impairment.
Guidance & market reaction: FY2026 adjusted-EPS guidance $4.14–$4.34 (mid $4.24) reaffirmed; tone upgraded — long-term growth target raised to 6–8%+ through 2030, >8% 2028–2030. Stock has responded: +14.7% YTD, +63.5% 5-yr TSR as of June 2026.
No transcripts on the research-layer shelf — ingest-transcript.ts saved none; sentiment is ``-sourced from Q1-FY2026 (May 2026) and Q4-FY2025 (Feb 2026) calls.
The tone has shifted decisively from "steady regulated utility" to "transformative demand growth" over the last 4–6 quarters. On the Q1-FY2026 call, CEO David Campbell framed the growth opportunity as extending "well into the 2030s," reported a fifth large-load ESA signed + two amended bringing the LLPS portfolio to ~2.5 GW steady-state (~3.0 GW including non-LLPS), flagged >10 GW of additional pipeline, and said ≥1 more ESA in 2026 would be upside to the plan. Recurring phrases now: "data center," "load growth," "6–8%+ EPS growth," "affordability safeguards." What management has stopped emphasizing: the old renewable-transition "Sustainability Transformation Plan" narrative — the story is now gas + grid + load, an "all-of-the-above" pivot. Caveat for calibration: management's tone is structurally promotional here because the entire equity story now depends on the market believing the pipeline converts.
Regulated electric peers (same SPP/Midwest regulated profile; pulled from sector context). Multiples are `` with date or n/a.
| Company | Ticker | Mkt cap | Fwd P/E | EV/EBITDA | Div yield | Notes |
|---|---|---|---|---|---|---|
| Evergy | EVRG | ~$19.2B | ~21.6x | ~12.1x | ~3.37% fwd | P/B 1.89 |
| Xcel Energy | XEL | n/a | n/a | n/a | n/a | data-center/MISO+SPP comp |
| Ameren | AEE | n/a | n/a | n/a | n/a | MO neighbor, MISO |
| WEC Energy | WEC | n/a | n/a | n/a | n/a | premium-multiple Midwest |
| CMS Energy | CMS | n/a | n/a | n/a | n/a | MI, data-center exposure |
5-yr avg ROE: n/a precisely; note authorized ROE ~10.5% and FY2025 implied ROE ~ mid-single-to-double digits on a ~$2.0B common-equity base is not cleanly derivable from the shelf without the equity balance — n/a.
Read: EVRG forward P/E ~21.6x sits roughly in line with the US electric-utility average (~21.9x) but above a tighter regulated-peer average (~17.6x) cited by one source — the sources conflict on the peer set, so I surface both rather than pick. The honest synthesis: Evergy trades at a premium to its own pre-data-center history and at a growth-utility multiple, justified only if the 6–8%+ growth actually lands. EV/EBITDA ~12.1x is full for a regulated name.
Pattern of what moves EVRG:
The tape says the market reacts to (1) data-center load announcements and (2) the EPS-growth-rate guidance, far more than to in-line quarterly prints — classic for a re-rating story.
CEO: David A. Campbell (President & CEO since Jan 2021; Chairman since May 2024).
CFO: Bryan Buckler (since Oct 2024; ex-OGE Energy CFO, ex-Duke IR/FP&A) — credible utility-finance background.
Accounting: clean for a regulated utility — the quality issues are structural, not manipulative.
Regulatory findings (required sub-section):
Built bottom-up from FY2025 actual adjusted EPS $3.83 and management's 6–8%+ framework.
Inputs (all labeled):
| Scenario | FY2026 | FY2027 | FY2028 | Logic |
|---|---|---|---|---|
| Base | $4.24 | $4.55 | $4.92 | Co. mid-guidance FY26; then ~7% (``: $4.24×1.07; $4.55×1.08, the >8% only kicking in 2028) |
| Bull | $4.34 | $4.73 | $5.20 | Top of guide + ESA upside; >8% lands earlier (``) |
| Bear | $4.14 | $4.30 | $4.45 | Rate-case disallowance / affordability caps growth to ~4%; equity dilution heavier (``) |
Consensus corroborates the base: FY2026 ~$4.33, FY2027 ~$4.64 — slightly above my base FY26 (I anchor to mgmt's $4.24 mid). All outputs ``; arithmetic shown.
Forecast log skipped — --watchlist loop does not commit a Brier forecast (per SKILL). Base case to log if promoted: "EVRG FY2027 non-GAAP EPS >= $4.55", resolves 2027-12-31.
Bull case. Evergy is the rare regulated utility with a genuine secular growth driver: contracted data-center + industrial load ($8.7B in minimum contractual obligations already on the books, 10–17 yr terms, collateralized), in a region (KS/MO) hyperscalers actually want for land/water/SPP access. LLPS protections shift demand risk onto the customer. The $21.6B capex plan compounds rate base at a step-change rate, PISA + Missouri SB4 CWIP minimize regulatory lag, and management guides 6–8%+ EPS growth (>8% 2028–30) — top-quartile for a wires-and-poles utility. A heavyweight, deal-savvy CEO. Pipeline >10 GW means years of upside revisions. A bond-proxy that also grows earnings is a scarce asset if rates fall.
Bear case. Three permanent-impairment vectors: (1) Regulatory/affordability ceiling — residential bills are already rising ~9.6%, regulators are publicly skeptical, and a populist disallowance or a cap on large-load cost-shifting could strand capex returns; the moat is the regulator, and the regulator is getting pressure. (2) Financing risk — deeply FCF-negative, $12.3B debt + $3.3B equity to raise into 2030; if rates stay high or the equity comes at a depressed price, dilution eats the EPS growth. (3) Demand-conversion risk — the pipeline is signed ESAs to begin 2026–2028; if a hyperscaler delays/cancels (AI-capex digestion), the rate-base build outruns the load. Pre-mortem (18 months out, thesis broke): a 2027 Missouri rate case lands below ask, one large ESA slips, and the stock de-rates from ~21.6x to a ~17x regulated multiple — a ~20% derating even with EPS intact. Multiples too high? Yes vs. its own history and vs. a strict regulated-peer ~17.6x; defensible only on the growth rate landing. Contrarian view the market refuses to see: the data-center load is real and contracted (bears who say "vaporware" are wrong — see the $8.7B), but it is also already in the multiple — the surprise risk is asymmetric to the downside (regulatory/affordability) because the upside (pipeline) is consensus.
What structurally breaks the money machine: the regulator turns. Evergy earns by convincing KCC/MPSC to let it recover an ever-larger rate base at ~10.5% ROE. Bills are climbing ~9–10%, consumer advocates (CURB) are organized, and there is a live narrative that ratepayers are subsidizing infrastructure for trillion-dollar tech firms — KCC already grilled Evergy on Panasonic economics. A single adverse rate order, an ROE cut, or a legislated affordability cap permanently lowers the earnings power of the whole $21.6B plan.
Revenue concentration shift: the growth is concentrating in a handful of hyperscaler ESAs. If Meta/Google digest AI capex and push out 1–2 GW (the same firms slashing elsewhere), Evergy is left with built/committed generation and a load that didn't show — exactly when SB4 CWIP has it earning on plants under construction (subject to refund). Moat weaker than bulls think? The franchise is bulletproof; the return on it is entirely regulator-granted and now politically contested. Most dangerous competitor bulls underestimate: not a competitor — it's behind-the-meter / co-located generation: if hyperscalers build their own gas/SMR power (the emerging pattern), the load bypasses Evergy's rate base entirely. Worst capital-allocation/governance: the Bluescape affiliation — a CEO who ran the activist firm now running the company it pressured, building the capex the activist wanted, while ratepayers foot the bill (FERC found them affiliated). Assumptions that must hold for ~$82: 6–8%+ EPS growth lands, equity raised near current price, no adverse rate order. If growth disappoints 20–30% (say 5% instead of 7%), the 21.6x multiple is unjustified → re-rate to ~17x → ~20–25% downside. Single permanent-impairment scenario: a populist Kansas/Missouri rate rollback + a large-load cost-allocation reversal — moderate-but-rising probability given the affordability politics.
A de-risked regulated-utility play on the data-center power buildout — the PSCW's April-2026 verbal approval of the VLC/Bespoke tariffs converts a $37.5B capex plan into a rate-base annuity, but at ~20x forward EPS the re-rating is mostly priced and the upside now lives in 2028 acceleration, not the multiple.
The purest non-utility way to own the AI-electricity buildout — a #2 infrastructure E&C contractor whose record $20.3B backlog and 34% Q1 growth are real, but the stock already prices ~40x forward EPS, so the bet is on the cycle's *duration*, not its existence.
A de-risked regulated growth utility hiding inside a decade-long value-trap reputation — the Loudoun County data-center boom is the largest demand tailwind in US utilities, but the equity only re-rates once CVOW finishes clean and the dividend finally grows; until then you are paid ~3.9% to wait on a BBB+ balance sheet stretched by a $65B capex plan.