Michigan-based CMS Energy (CMS) is an energy company focusing primarily on Michigan’s utility operations. CMS operates through three business segments, namely, Electric Utility, Gas Utility and Enterprises.
CMS Energy recorded EPS of $0.54 compared to $0.72 in the same quarter a year ago and fell short of the consensus estimate of $0.60.
For the full-year 2021, the company estimates adjusted EPS between $2.63 and $2.65, raising the guidance from $2.61 and $2.65 but falling short of analysts’ estimate of $2.79.
CMS Energy ended Q3 with $102 million in cash as compared to $32 million same quarter last year.
With this in mind, we used TipRanks to take a look at the risk factors for CMS Energy.
Risk Factors
According to the new TipRanks Risk Factors tool, CMS’s main risk categories is Production, representing 31% of the total 29 risks identified for the stock. Legal and Regulatory and Macro and Political are the next two major risk categories at 24% and 17% of the total risks, respectively.
Recently, CMS Energy added a new risk factor to its Macro & Political category. The company informs investors that it faces “natural and human disruptions” to meeting its long-term plan of ending coal usage by 2025 and delivering clean, resilient, affordable, and reliable energy, as declared in the 2021 Integrated Resource Plan (IRP).
For one, the regulatory bodies may not approve, or might delay the 2021 IRP in parts or as a whole. These authorities may prohibit CMS from engaging in acquisitions of natural gas plants related to 2021-IRP. They may not consent to retirement of coal-fueled plants at the rates planned by CMS.
Further, the company warns that due to supply chain bottle-necks, consumers might not be able to acquire all the generation capacity proposed in the 2021 IRP. CMS Energy also talks about the possibility of change in the costing, supply and the availability of generation capacity, which may have an adverse influence on 2021 IRP.
In addition, the technology forecasted in 2021, such as electric vehicles and battery storage, may not be economically feasible or available commercially. These factors might affect the company’s reputation and even have a financial and negative impact.
The Production risk factor’s sector average is 25%, below CMS Energy’s 31%. CMS Energy’s stock has gained 10.76% over the past year.
Analysts’ Take
Last week, KeyBanc analyst Sophie Karp reiterated a Buy rating on CMS Energy stock with a price target of $68. Karp’s new price target suggests 7.63% upside potential.
Consensus among analysts is a Moderate Buy based on 4 Buys and 4 Holds. The average CMS Energy price target of $66.50 implies 5.25% upside potential to current levels.
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