Evergy (EVRG) Q4 2024 Earnings: AI, Lawsuit & Dividend Outlook#
This blog post provides a comprehensive analysis of Evergy, Inc. (EVRG), focusing on its upcoming Q4 2024 earnings release, the impact of AI data centers on its growth prospects, the Birchtech lawsuit, renewable energy initiatives, dividend sustainability, and competitive position in the Midwest utility market. It offers insights for investors to make informed decisions about Evergy, Inc. stock.
Evergy's Q4 2024 Earnings Preview: What to Expect#
Analyst Expectations for Q4 Earnings#
Evergy, Inc. (EVRG) is set to release its fourth-quarter 2024 earnings on Thursday, February 27, 2025, before the market opens. Investors and analysts alike are keenly watching to see how the company performed in the last quarter of the year, especially given the various factors influencing the utility sector. The company will host a conference call and audio webcast at 9:00 a.m. Eastern Time (8:00 a.m. Central) to discuss the results. This section provides a preview of what to expect from the earnings release, focusing on analyst expectations and key financial metrics to watch.
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According to Zacks.com, Evergy, Inc.'s fourth-quarter 2024 results are expected to continue to benefit from investments, energy efficiency programs, and customer growth. These factors have been instrumental in driving the company's performance throughout the year, and it is anticipated that they will continue to contribute positively to the bottom line. However, it's important to consider potential headwinds, such as increased operating expenses and interest costs, which could offset some of the gains. Wall Street expects earnings growth, but some indicators suggest a potential earnings miss.
Key Financial Metrics to Watch#
Several key financial metrics will be crucial in evaluating Evergy, Inc.'s Q4 2024 performance. Revenue growth will be a primary indicator of the company's ability to capitalize on increasing electricity demand. Investors will also be closely monitoring earnings per share (EPS) to assess profitability and efficiency. According to analyst estimates, the consensus EPS estimate for Q4 is $0.37, representing a +37% year-over-year increase. The analyst estimates for the next 4 years are shown in the table below.
Furthermore, it will be essential to analyze Evergy, Inc.'s operating expenses, including fuel costs, maintenance expenses, and administrative costs. Effective cost management is critical for maintaining profitability in the utility sector. The company's capital expenditure (CAPEX) plans will also be of interest, as these investments are vital for modernizing the grid, expanding renewable energy capacity, and meeting future electricity demand.
| Date | Estimated Revenue Avg | Estimated EBITDA Avg | Estimated EBIT Avg | Estimated NetIncome Avg | Estimated EPS Avg |
|---|---|---|---|---|---|
| 2028-12-31 | 6616333333 | 2702976193 | 1494993141 | 1099952919 | 4.77203 |
| 2027-12-31 | 6407060000 | 2617481583 | 1447706800 | 1040078239 | 4.50223 |
| 2026-12-31 | 6161354979 | 2517103505 | 1392188539 | 978824016.5 | 4.26016 |
| 2025-12-31 | 5942979205 | 2427890268 | 1342845456 | 931342000 | 4.02389 |
AI Data Centers: Powering Evergy's Future Growth?#
Data Center Expansion in the Midwest#
One of the most significant trends impacting the utility sector is the increasing demand for electricity from artificial intelligence (AI) data centers. These facilities require vast amounts of power to operate, and their expansion is driving up electricity consumption across the country. Evergy, Inc. is strategically positioned to benefit from this trend, particularly in the Midwest region, where several data centers are being developed.
The growth of AI data centers in the Midwest is being fueled by factors such as affordable real estate, access to renewable energy sources, and a favorable regulatory environment. As these data centers expand, they will require reliable and affordable electricity, creating opportunities for utility companies like Evergy, Inc. to provide power and related services.
Evergy's Infrastructure Investments to Support AI Growth#
To capitalize on the growing demand from AI data centers, Evergy, Inc. is investing in infrastructure upgrades and expanding its generation capacity. These investments include modernizing the grid to improve reliability and efficiency, as well as adding new renewable energy sources to meet the sustainability goals of data center operators.
Evergy, Inc.'s investment in two new 705 MW high-efficiency natural gas plants, announced on October 21, 2024, is another example of its commitment to meeting the growing electricity demand. These plants will provide a reliable source of power to support data center operations, while also helping to balance the intermittency of renewable energy sources. The company is forecasting strong growth as electricity demand rises, fueled by a strained grid and the expansion of artificial intelligence data centers. This strategic move underscores Evergy, Inc.'s proactive approach to addressing the energy needs of the future.
Birchtech Lawsuit: A Cloud Over Evergy's Horizon?#
Details of the Patent Infringement Claim#
In February 2025, Birchtech Corp. filed a patent infringement lawsuit against Evergy, Inc., alleging that the utility company is using patent-protected mercury emissions technology without permission. The lawsuit seeks an injunction to stop Evergy, Inc. from using the technology, as well as damages for past infringement.
The lawsuit adds a layer of uncertainty to Evergy, Inc.'s outlook, as the outcome could have financial and operational implications for the company. If Birchtech prevails in the lawsuit, Evergy, Inc. may be required to pay damages, modify its mercury emissions technology, or license the technology from Birchtech.
Potential Financial Impact of the Lawsuit#
The financial impact of the Birchtech lawsuit on Evergy, Inc. is currently uncertain, as it depends on the outcome of the litigation. However, the potential costs could be significant, including legal fees, damages, and the cost of modifying or replacing the mercury emissions technology.
The lawsuit also raises concerns about Evergy, Inc.'s reputation and its relationship with regulators. A negative outcome could damage the company's credibility and make it more difficult to obtain regulatory approvals for future projects. Investors should closely monitor the developments in the Birchtech lawsuit, as it could have a material impact on Evergy, Inc.'s financial performance and outlook.
Renewable Energy: Evergy's Path to a Sustainable Future#
Evergy's Renewable Portfolio: A Closer Look#
Evergy, Inc. is committed to expanding its renewable energy portfolio as part of its efforts to reduce carbon emissions and promote sustainability. The company is investing in a variety of renewable energy projects, including wind, solar, and hydroelectric power.
Adding more renewable assets should boost its performance. These investments are expected to improve Evergy, Inc.'s environmental profile, attract ESG-focused investors, and reduce its reliance on fossil fuels.
Cost and Efficiency of Renewable Projects#
The cost and efficiency of Evergy, Inc.'s renewable energy projects are critical factors in determining their profitability and impact on carbon emissions reduction. The company is focused on selecting projects that offer the best combination of cost-effectiveness and environmental benefits.
For example, Evergy, Inc. is investing in wind energy projects in areas with high wind resources, which can generate electricity at a lower cost than other renewable energy sources. The company is also exploring solar energy projects in areas with high solar irradiance, which can maximize electricity generation and reduce the cost per kilowatt-hour.
Impact on Carbon Emissions Reduction#
Evergy, Inc.'s renewable energy projects are expected to have a significant impact on reducing carbon emissions. By replacing fossil fuel-based power generation with renewable energy, the company can lower its carbon footprint and help to mitigate the effects of climate change.
The exact amount of carbon emissions reduction will depend on the specific renewable energy projects that Evergy, Inc. develops and the amount of fossil fuel-based power generation that they displace. However, the company is committed to achieving significant carbon emissions reductions over the next decade, as part of its broader sustainability goals.
Interest Rates and Utilities: Navigating the Market Landscape#
Historical Correlation Between Interest Rates and Evergy's Stock#
Utility stocks are often seen as bond proxies, meaning that their performance is closely correlated with interest rates. When interest rates rise, utility stocks tend to decline, as investors shift their investments to bonds, which offer a higher yield.
Long-term rates have risen, creating potential buying opportunities for utilities like AEP, AWK, AWR, BKH, ES, Evergy, Inc., SJW, WEC, WTRG, and XEL. These utilities have strong fundamentals, attractive valuations, and investment-grade balance sheets, offering potential total returns of +20% to +56% by 2025. This makes Evergy, Inc. and its peers potentially attractive due to rising long-term rates.
Debt-to-Equity Ratio Comparison#
Evergy, Inc.'s debt-to-equity ratio is a key indicator of its financial leverage and its sensitivity to interest rate changes. A higher debt-to-equity ratio means that the company is more reliant on debt financing, which can make it more vulnerable to rising interest rates.
Evergy, Inc.'s debt ratio TTM is 0.1024914375305247 and its debt equity ratio TTM is 0.9667263284528036. It is important to compare Evergy, Inc.'s debt-to-equity ratio with its peers to assess its relative risk. Utility companies with lower debt-to-equity ratios may be better positioned to weather rising interest rates.
Evergy's Dividend: A Safe Haven for Investors?#
Free Cash Flow Analysis#
Evergy, Inc. is known for being a high-yield dividend stock and is included in lists of top high-yield dividend stocks for both January and February 2025. For income-seeking investors, Evergy, Inc.'s dividend can be an attractive feature. However, it's important to analyze the sustainability of the dividend to ensure that it can be maintained in the long term.
A key factor in determining dividend sustainability is the company's free cash flow. Free cash flow is the cash that a company generates after paying for its operating expenses and capital expenditures. If a company's free cash flow is insufficient to cover its dividend payments, it may be forced to reduce the dividend or borrow money to fund it. Evergy, Inc.'s free cash flow per share TTM is negative (-2.0924880590534087).
Capital Expenditure Plans#
Evergy, Inc.'s capital expenditure plans are another important factor to consider when assessing dividend sustainability. If the company is planning to make significant capital investments in the future, it may need to reduce its dividend payments to conserve cash.
Evergy, Inc. is investing in infrastructure upgrades and renewable energy projects. These investments are expected to improve the company's long-term growth prospects, but they may also put pressure on its dividend payments in the short term. The company's capital expenditure coverage ratio TTM is 0.8071242745647389.
Dividend Yield and Payout Ratio#
Evergy, Inc.'s dividend yield and payout ratio are also important metrics to consider. The dividend yield is the annual dividend payment divided by the stock price, while the payout ratio is the percentage of earnings that are paid out as dividends.
Evergy, Inc.'s dividend yield TTM is 0.03789427570093457 and payout ratio TTM is 0.6923707957342083. A high dividend yield can be attractive to investors, but it's important to ensure that the payout ratio is sustainable. A payout ratio that is too high may indicate that the company is paying out too much of its earnings as dividends, which could put pressure on its financial stability.
Strategic Investments: Modernizing the Grid for Tomorrow#
Transmission and Distribution Upgrades#
Evergy, Inc. is committed to modernizing its grid infrastructure to improve reliability, efficiency, and resilience. The company is investing in transmission and distribution upgrades, as well as customer-facing platform enhancements.
These investments are expected to benefit customers by reducing outages, improving power quality, and providing access to new energy services. They are also expected to benefit the company by reducing operating costs, increasing revenue, and improving its competitive position.
Customer-Facing Platform Enhancements#
Evergy, Inc. is also investing in customer-facing platform enhancements to improve the customer experience and provide access to new energy services. These enhancements include online portals, mobile apps, and smart home integration.
By improving the customer experience, Evergy, Inc. hopes to increase customer satisfaction, reduce customer churn, and attract new customers. By providing access to new energy services, the company hopes to increase revenue and improve its competitive position.
Evergy vs. Peers: A Competitive Analysis#
Competitive Advantages#
Evergy, Inc. operates in a competitive market, facing competition from other utility companies in the Midwest region. To succeed in this market, Evergy, Inc. must maintain a competitive cost structure, provide reliable service, and offer innovative energy solutions.
Evergy, Inc.'s competitive advantages include its strong financial position, its commitment to renewable energy, and its focus on customer service. However, the company also faces challenges, such as rising operating costs, regulatory scrutiny, and the need to adapt to changing electricity demand patterns.
Key Challenges#
Evergy, Inc. faces several key challenges in the current market environment. These challenges include rising operating costs, regulatory scrutiny, and the need to adapt to changing electricity demand patterns.
To overcome these challenges, Evergy, Inc. must focus on cost management, innovation, and customer service. The company must also work closely with regulators to ensure that its investments are aligned with the public interest.
Key Takeaways: Evergy's Outlook in 2025 and Beyond#
Strategic Outlook#
Evergy, Inc. is well-positioned to capitalize on the growing demand for electricity from AI data centers and other sources. The company is investing in infrastructure upgrades, renewable energy projects, and customer-facing platform enhancements to meet this demand and improve its competitive position.
However, Evergy, Inc. also faces challenges, such as rising operating costs, regulatory scrutiny, and the Birchtech lawsuit. To overcome these challenges, the company must focus on cost management, innovation, and customer service.
Investment Considerations#
Investors should closely monitor Evergy, Inc.'s Q4 2024 earnings release, as well as the developments in the Birchtech lawsuit. The company's financial performance and the outcome of the litigation could have a material impact on its stock price.
Investors should also consider Evergy, Inc.'s dividend sustainability, its sensitivity to interest rates, and its competitive position in the Midwest utility market. By carefully analyzing these factors, investors can make informed decisions about whether to invest in Evergy, Inc. stock.