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CMS Energy (CMS)
NYSE:CMS
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CMS Energy
(NYSE:CMS)
71Outperform
Positive Factors
Growth Prospects
The company's 5-year capital plan increased by 18% to $20bn, driven by investments in clean energy generation and distribution.
Regulatory Approval
The Michigan PSC approved a final order in CMS’s electric rate case proceeding, which is viewed as a constructive outcome for CMS Energy.
Valuation Outlook
CMS Energy's price objective has been raised to $80 from $73, reflecting a positive valuation outlook.
Negative Factors
External Equity Program
Manageable external equity program is resulting in about 2.2-2.4% average annual dilution relative to 1.7% previously.
Regulatory Concerns
The evolving regulatory landscape, and likely need for frequent rate case filings, is a key item to monitor.
CMS Energy (CMS) vs. S&P 500 (SPY)
Market Cap
$21.81B
Dividend Yield2.86%
Average Volume (3M)3.20M
Price to Earnings (P/E)21.6
Beta (1Y)0.09
Revenue Growth5.87%
EPS Growth3.59%
CountryUS
Employees8,324
SectorUtilities
Sector Strength83
IndustryRegulated Electric
Share Statistics
EPS (TTM)3.38
Shares Outstanding299,123,750
10 Day Avg. Volume3,650,551
30 Day Avg. Volume3,197,130
Financial Highlights & Ratios
PEG Ratio6.00
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.82
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit12.38
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$78.27Price Target Upside7.35% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
CMS Energy Business Overview & Revenue Model
Company DescriptionCMS Energy Corporation operates as an energy company primarily in Michigan. The company operates through three segments: Electric Utility; Gas Utility; and Enterprises. The Electric Utility segment is involved in the generation, purchase, transmission, distribution, and sale of electricity. This segment generates electricity through coal, wind, gas, renewable energy, oil, and nuclear sources. Its distribution system comprises 208 miles of high-voltage distribution overhead lines; 4 miles of high-voltage distribution underground lines; 4,428 miles of high-voltage distribution overhead lines; 19 miles of high-voltage distribution underground lines; 82,474 miles of electric distribution overhead lines; 9,395 miles of underground distribution lines; 1,093 substations; and 3 battery facilities. The Gas Utility segment engages in the purchase, transmission, storage, distribution, and sale of natural gas, which includes 2,392 miles of transmission lines; 15 gas storage fields; 28,065 miles of distribution mains; and 8 compressor stations. The Enterprises segment is involved in the independent power production and marketing, including the development and operation of renewable generation. It serves 1.9 million electric and 1.8 million gas customers, including residential, commercial, and diversified industrial customers. The company was incorporated in 1987 and is headquartered in Jackson, Michigan.
How the Company Makes MoneyCMS Energy generates revenue primarily through its utility operations, with Consumers Energy being the main driver. The company earns money by charging customers for electricity and natural gas services based on regulated rates established by state utility commissions. These rates are designed to cover the costs of providing energy services and to allow for a reasonable return on investment. Revenue streams include the sale of electricity generated from a diversified portfolio of power plants, and the distribution and transportation of natural gas. In addition, CMS Energy may engage in strategic partnerships and initiatives aimed at enhancing energy efficiency and expanding renewable energy sources, which can contribute to its earnings. Regulatory factors and the company's ability to manage operational costs and investments in infrastructure play a significant role in its profitability.
CMS Energy Financial Statement Overview
Summary
CMS Energy exhibits strong revenue growth and profitability with a robust balance sheet. However, cash flow management presents challenges due to high capital expenditures affecting free cash flow.Income Statement
CMS Energy shows a strong financial performance with consistent revenue growth, demonstrated by a 4% increase in TTM revenue compared to the previous year. The company maintains a healthy gross profit margin at 57.14% and an improved net profit margin standing at 13.10% for TTM. However, EBIT and EBITDA margins have shown slight fluctuations, indicating potential operational challenges.―
Balance Sheet
The balance sheet reflects a stable financial position with a noteworthy equity growth, reaching $11.6 billion in TTM. The debt-to-equity ratio is moderate at 0.97, suggesting a balanced capital structure. Return on Equity (ROE) has improved to 8.77%, indicating efficient use of equity to generate profits. However, the equity ratio stands at 32.34%, showing room for improvement in asset financing.72
Cash Flow
CMS Energy's cash flow position is mixed. The operating cash flow to net income ratio is robust at 2.37, indicating strong cash generation capabilities. However, the free cash flow is negative at -$75 million for TTM, primarily due to high capital expenditures, suggesting potential liquidity challenges if not addressed.―
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 7.51B | 7.46B | 8.60B | 7.33B | 6.68B | Gross Profit |
| 3.21B | 2.86B | 2.76B | 2.65B | 2.77B | EBIT |
| 1.49B | 1.24B | 295.00M | 209.00M | 398.00M | EBITDA |
| 3.07B | 2.78B | 2.55B | 2.44B | 2.36B | Net Income Common Stockholders |
| 1.00B | 887.00M | 837.00M | 728.00M | 755.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 103.00M | 227.00M | 164.00M | 452.00M | 168.00M | Total Assets |
| 36.51B | 33.52B | 31.35B | 28.75B | 29.67B | Total Debt |
| 16.57B | 15.64B | 15.43B | 12.47B | 15.20B | Net Debt |
| 16.46B | 15.42B | 15.26B | 12.02B | 15.03B | Total Liabilities |
| 27.17B | 25.39B | 23.76B | 21.57B | 23.59B | Stockholders Equity |
| 8.23B | 7.54B | 7.01B | 6.63B | 5.50B |
| Cash Flow | Free Cash Flow | |||
| -808.00M | -265.00M | -1.63B | -390.00M | -1.17B | Operating Cash Flow |
| 2.37B | 2.31B | 855.00M | 1.82B | 1.28B | Investing Cash Flow |
| -3.05B | -3.39B | -2.48B | -1.23B | -2.87B | Financing Cash Flow |
| 614.00M | 1.14B | 1.32B | -295.00M | 1.62B |
CMS Energy Technical Analysis
Positive
72.91
Price Trends
72.92
Negative
69.79
Positive
68.44
Positive
Market Momentum
0.17
Positive
50.36
Neutral
40.38
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CMS, the sentiment is Positive. The current price of 72.91 is above the 20-day moving average (MA) of 72.55, below the 50-day MA of 72.92, and above the 200-day MA of 68.44, indicating a neutral trend. The MACD of 0.17 indicates Positive momentum. The RSI at 50.36 is Neutral, neither overbought nor oversold. The STOCH value of 40.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CMS.
CMS Energy Risk Analysis
CMS Energy disclosed 31 risk factors in its most recent earnings report. CMS Energy reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CMS Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $21.12B | 7.78 | 17.93% | 5.86% | 5.36% | 209.92% | |
71 Outperform | $21.81B | 21.57 | 12.53% | 2.86% | 5.87% | 3.59% | |
70 Neutral | $24.87B | 22.96 | 8.69% | 3.94% | 7.92% | 1.54% | |
69 Neutral | $21.60B | 25.40 | 5.56% | 4.92% | 10.82% | ― | |
69 Neutral | $26.74B | 30.20 | 7.00% | 2.89% | 5.62% | 30.02% | |
67 Neutral | $25.45B | 26.21 | 9.22% | 2.13% | 4.76% | 4.08% | |
63 Neutral | $8.49B | 11.24 | 5.22% | 4.35% | 3.04% | -11.95% |
* Utilities Sector Average
Performance Comparison
CMS
CMS Energy
72.91
13.21
22.13%
CNP
Centerpoint Energy
38.99
10.47
36.71%
EIX
Edison International
54.88
-14.87
-21.32%
FE
FirstEnergy
43.09
5.33
14.12%
ES
Eversource Energy
58.83
1.85
3.25%
PPL
PPL
36.17
8.99
33.08%
CMS Energy Earnings Call Summary
Earnings Call Date:Apr 24, 2025
(Q1-2025)
| % Change Since: -0.80%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
CMS Energy showed strong financial performance and benefitted from a constructive regulatory environment, with positive economic indicators in Michigan providing confidence. However, the company faced significant storm-related costs and higher operational expenses, alongside potential risks from legislative changes affecting renewable investments.Q1-2025 Updates
Positive Updates
Strong Financial Performance
CMS Energy reported adjusted earnings per share of $1.02 for the first quarter, which compares favorably to the same period in 2024. The company remains confident in this year's guidance and long-term outlook, reaffirming financial objectives with full-year guidance at $3.54 to $3.60 per share, expecting to hit the high end.
Constructive Regulatory Environment
The company received a favorable electric rate order in March, with approximately 65% of the revised ask approved. This supports investments to improve electric reliability. The gas rate case also started with a constructive staff position.
Positive Economic Indicators in Michigan
CMS Energy highlighted strong growth indicators, including a 2% to 3% load growth within the five-year financial plan, accelerated data center projects, and a healthy pipeline of nine gigawatts influenced by tax exemptions.
Resilient Supply Chain Strategy
With 90% of direct and indirect spend domestically sourced, CMS Energy continues to shift to US-based vendors to lower exposure to tariffs, providing stability amidst economic uncertainty.
Successful Hybrid Issuance
CMS Energy issued $1 billion in junior subordinated notes at a 6.5% coupon, demonstrating strong market receptivity and addressing a significant portion of 2025's financing needs.
Negative Updates
Record Storm Costs
The late March to early April storm was the costliest in the company's history, estimated at $100 million in operating and maintenance expenses. This led to the filing of a deferred accounting order to manage financial impacts.
Higher Operational Costs
The company experienced higher O&M costs due to the execution of its electric reliability roadmap and timing of select items at NorthStar, leading to a $0.05 per share negative variance compared to 2024.
Potential Transferability Risk
CMS Energy faces potential risks from the repeal of tax credit transferability provisions in the Inflation Reduction Act, which could impact future renewable project economics.
Company Guidance
In the CMS Energy 2025 First Quarter Results call, guidance was provided with several key metrics highlighted. The company reaffirmed its full-year earnings per share (EPS) guidance at $3.54 to $3.60, with confidence leaning towards the high end. In the first quarter, adjusted earnings per share were reported at $1.02, showing a favorable comparison to the previous year due to normal weather conditions and higher rate relief net of investments. The company plans to file its next electric rate case in Q2 and expects an order in its Renewable Energy Plan by mid-September. Longer-term, CMS Energy continues to guide towards the high end of its adjusted EPS growth range of 6% to 8%. The financial strategy includes a focus on maintaining solid investment-grade credit ratings, evidenced by a recent $1 billion hybrid issuance. Additionally, CMS Energy is actively managing storm-related costs, seeking a deferred accounting order for a historic storm that incurred roughly $100 million in expenses, while simultaneously identifying cost-saving measures to uphold financial objectives.CMS Energy Corporate Events
Business Operations and StrategyFinancial Disclosures
CMS Energy Reports Q1 2025 Earnings Increase
Positive
Apr 24, 2025
On April 24, 2025, CMS Energy announced its first-quarter earnings for 2025, reporting an earnings per share of $1.01, up from $0.96 in 2024. The company reaffirmed its 2025 adjusted earnings guidance and expressed confidence in achieving high-end growth targets, supported by favorable outcomes in its electric rate case and ongoing customer investment projects.
Spark’s Take on CMS Stock
According to Spark, TipRanks’ AI Analyst, CMS is a Outperform.
CMS Energy’s overall stock score reflects a robust financial performance backed by strong cash flow and solid revenue growth. The positive technical indicators add to the optimism, although there is a slight overvaluation concern. The recent earnings call underscored strong future growth prospects, particularly in renewable energy and customer reliability improvements. Investors should remain aware of potential risks related to high leverage and overbought technical conditions.
To see Spark’s full report on CMS stock, click here.
DividendsBusiness Operations and StrategyFinancial Disclosures
CMS Energy Boosts Dividend Amid Strong 2024 Earnings
Positive
Feb 6, 2025
CMS Energy reported strong financial results for 2024 with an increase in earnings per share to $3.33 from $3.01 in 2023 and adjusted earnings per share rising to $3.34 from $3.11. The company announced an 11-cent increase in its annual dividend for 2025 and raised its adjusted EPS guidance to $3.54 to $3.60. Significant investments in the electric grid and economic development efforts led to improved power restoration times and job creation in Michigan, positioning stakeholders positively for 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.