Source: Investing Published 10/29/2024, 11:36
On Tuesday, Mizuho initiated coverage on Evergy (NASDAQ:EVRG), a utility company, with an “outperform” rating and a $67.00 price target. Mizuho ’s analysis indicates that Evergy shares are currently trading at a price-to-earnings (P/E) discount of about 12% to its peer group. Mizuho analysts believe the company’s stock has the potential to close this gap and trade at a low single-digit discount in the near term.
with the potential to reach a similar multiple over the long term.
The bullish outlook on Evergy is based on two key points. First, there is an expectation that Evergy can identify capital investment opportunities that will allow it to grow its price base and earnings at a pace similar to its industry peers. Second, the firm expects regulatory conditions in Kansas, where Evergy operates, to continue to improve.
According to Mizuho’s assessment, Evergy’s current plan is to grow its price base at a compound annual growth rate (CAGR) of 6% through 2028. This growth is expected to result in an increase in earnings per share (EPS) of 4%-6% through 2026.
without the need for additional equity.
The company also sees potential for additional capital expenditure opportunities.
particularly in power generation, which could support data center and manufacturing needs in both Kansas and Missouri. These opportunities are expected to contribute to sustainable higher growth in Evergy’s price base and earnings through the end of the decade.
InvestingPro Insights
Complementing Mizuho’s bullish outlook on Evergy (NASDAQ:EVRG).
recent data from InvestingPro provides additional context on the company’s financial position and market performance. As of the trailing twelve months ending in Q2 2024, Evergy reported revenue of $5.64 billion.
with a gross profit margin of 49.95%. The company’s price-to-earnings (P/E) ratio of 19.01 is slightly above the industry average.
which is in line with Mizuho’s observation about the current discount to peers.
InvestingPro’s tips highlight Evergy’s strong dividend history, having raised its dividend for 20 consecutive years and maintained payments for 33 years. This consistent dividend growth, coupled with a current dividend yield of 4.22%, could appeal to income-focused investors. The company’s stock is trading near a 52-week high.
with a strong YTD total price return of 20.98%, indicating positive market sentiment that supports Mizuho’s “Outperform” rating.
It’s worth noting that InvestingPro offers 8 additional Evergy tips, providing a more comprehensive analysis for investors seeking deeper insights. These tips, along with real-time metrics, can be valuable in assessing Evergy’s potential to close the valuation gap as suggested by Mizuho’s analysis. Meta Description