Short Trade Idea
Enter your short position between $82.49 (an intermediate horizontal support level) and $83.69 (Friday’s intra-day high).
Market Index Analysis
Evergy (NASDAQ:EVRG) is a member of the S&P 500 Index.
This index experienced a massive one-day sell-off amid surging bearish trading volumes.
The Bull Bear Power Indicator for the S&P 500 Index turned bearish with a descending trendline.
Market Sentiment Analysis
Equity futures are mixed this morning following Friday’s massive AI-led sell-off, mixed with a moderate repricing towards an interest rate hike this year to combat inflation, as the US Fed is behind the curve while the labor market remains healthy. Renewed fighting in the Middle East keeps upward pressure on oil prices, which are slowly moving towards the $100 barrel mark again. Earnings from Oracle and Adobe highlight this week, with all eyes on Friday’s blockbuster SpaceX IPO.
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Evergy Fundamental Analysis
Evergy (EVRG) is an investor-owned utility (IOU) and the largest electric company in Kansas with over 1.7 million customers in Kansas and Missouri. It generates over 16,000 megawatt-hours of electricity from over 40 power plants.
So, why am I bearish on EVRG following its post-earnings breakdown?
Evergy reported revenues of $1.44 billion and earnings per share of $0.69, beating estimates of $1.27 billion and $0.61, respectively. Still, I remain bearish on rising capital costs as Evergy transitions away from coal. It also faces regulatory setbacks, including the Kansas Corporation Commission's decision to halt a portion of its proposed 133-mile transmission line project on ecological grounds. Higher-for-longer interest rates add to capital concerns given its debt load, while volatility in load growth clouds the revenue picture.
Metric | Value | Verdict |
P/E Ratio | 22.15 | Bearish |
P/B Ratio | 1.89 | Bearish |
PEG Ratio | 2.31 | Bearish |
Current Ratio | 0.45 | Bearish |
ROIC-WACC Ratio | Positive | Bullish |
Evergy Fundamental Analysis Snapshot
The price-to-earnings (P/E) ratio of 22.15 makes EVRG an expensive stock in its industry. By comparison, the P/E ratio for the S&P 500 Index is 31.83.
The average analyst price target for EVRG is $90.62. This suggests moderate upside potential, but downside risks are greater.
Evergy Technical Analysis
Today’s EVRG Signal
Evergy Price Chart
The EVRG D1 chart shows price action breaking down below its horizontal resistance zone.
It also shows price action between its ascending 38.2% and 50.0% Fibonacci Retracement Fan levels.
The Bull Bear Power Indicator turned bullish but remains below its descending trendline.
The average bearish trading volumes are higher than the average bullish trading volumes.
EVRG corrected less than the S&P 500 Index, a bullish confirmation, but bearish catalysts are accumulating.
My EVRG Short Stock Trade
EVRG Entry Level: Between $82.49 and $83.69
EVRG Take Profit: Between $71.41 and $72.56
EVRG Stop Loss: Between $87.90 and $90.62
Risk/Reward Ratio: 2.05
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