Evergy Inc (EVRG)

Company Profile: Evergy Inc (EVRG)

Evergy is a regulated electric utility operating in Kansas and Missouri, formed from the 2018 merger of Westar Energy and Great Plains Energy (KCP&L). For years, EVRG was a textbook "boring utility" - slow-growing, defensive, more of an income play than a growth story. That has changed.

The Big Story: From Boring Utility to AI Power Play

EVRG now sits at the center of one of the hottest themes in the market - the massive electricity demand from AI data centers. The company has signed Electric Service Agreements (ESAs) with several major names:

• Google - a $10 billion data center campus in Kansas City, Missouri, up to 700 MW
• Meta - a $1 billion data center in the Kansas City, Missouri area
• Panasonic - a $4 billion EV battery plant in De Soto, Kansas (already ramping)

Total: ~3.0 GW of signed large-load demand - up from just 1.9 GW disclosed only three months earlier.

Why Do Data Centers Need This Much Power?

AI data centers aren't like traditional data centers. Training and running AI models requires thousands of GPUs running around the clock, and a single hyperscaler campus alone can draw 500 MW or more - comparable to the electricity supply for hundreds of thousands of homes. That's why big tech companies like Google and Meta are willing to sign long-term contracts with local utilities to lock in reliable, sufficient power supply.

Why Does the Regulated Utility Profit From This?

This is the key to understanding the utility business model. A regulated utility like EVRG doesn't make money the way a normal company does (sell a product, keep the margin). Instead, regulators allow it to earn a fair return on approved infrastructure assets - called the "rate base." When EVRG builds a new power plant, transmission line, or infrastructure to connect a data center, that cost (if approved by regulators) enters the rate base, and EVRG earns a stable, predictable return on it for years. The more infrastructure needed to support data centers, the bigger the rate base, and the higher the "guaranteed" EPS growth through the regulatory process - a sharp contrast to a typical tech company whose profits swing with consumer demand.

Upgraded Growth Numbers

CEO David Campbell (since 2021) is credited with repairing the regulatory relationship with Kansas (historically fairly adversarial post-Westar) and successfully landing this hyperscaler customer pipeline.

Shariah Status

EVRG is NON_COMPLIANT (not Shariah-compliant) per our database. It is a conventional utility with a substantial debt structure (typical for a capital-intensive utility sector) - not suitable for investors who require fully Shariah-compliant stocks.

EVRG reported actual Q2 2026 results on 6 August 2026 - beating market expectations on every key metric. GAAP net income was $215.0 million ($0.91 per share) versus $171.3 million ($0.74 per share) in Q2 2025 - up 23%. Adjusted (non-GAAP) earnings were $209 million ($0.88 per share) versus $0.82 a year earlier, beating the analyst consensus of $0.85. Revenue of $1,500.1 million also beat market estimates by a meaningful margin (roughly $96 million above expectations).

Key drivers: recovery of regulated investments, weather-normalized demand growth, and higher large-customer revenue, partially offset by higher O&M and depreciation & amortization expense. Management maintained FY2026 EPS guidance at $4.14-$4.34 (midpoint $4.24) and raised the five-year capital plan by $1 billion to $21.6 billion, pushing the rate base compound annual growth rate (CAGR) to roughly 12%.

Alongside Q2 2026 results, EVRG declared a quarterly dividend of $0.6950 per share, paid on 18 September 2026. This equates to an annualized dividend of $2.78 per share - in line with what the prior review already expected. At the current price of $81.39, this represents a dividend yield of 3.42%, slightly higher than the 3.35% in the previous review because the stock price has pulled back somewhat, not because of a dividend cut.

Based on the FY2026 EPS guidance midpoint ($4.24), EVRG's dividend payout ratio sits around 65% - within the typical target range for a US regulated utility (usually 60-70%), leaving reasonable room to keep funding the large capex program without threatening near-term dividend continuity.