CMS Energy Struggles to Keep Pace with Market Despite Strong Earnings Growth
CMS Energy, based in Jackson, Michigan, stands as a notable player in the energy utilities sector. With a market capitalization of $20.5 billion, the company primarily serves Michigan residents through its Electric Utility, Gas Utility, and Enterprises segments.
Stock Performance Trails Market and Peers
Over the past year, CMS Energy’s stock performance has been below that of the broader market. While CMS Energy’s shares have risen 18% in 2024 and 19.9% over the last 52 weeks, these figures fall short compared to the S&P 500 Index’s ($SPX) gains of 24.1% year-to-date and 30.1% over the past year.
Focusing further, CMS has underperformed against the Utilities Select Sector SPDR Fund (XLU), which has seen an impressive 27.1% increase in 2024 and 29.6% over the same 52-week timeframe.
Q3 Earnings Don’t Meet Expectations, but Profitability Soars
Following the release of its Q3 earnings on October 31, CMS stock showed a slight decline. The company reported operating revenues of $1.7 billion, missing analysts’ expectations by 4.9%, which raised concerns among investors. However, it’s worth noting that the company achieved a 4.2% increase in revenue compared to the same quarter last year.
In terms of profitability, CMS Energy demonstrated significant progress, with a remarkable 41% rise in adjusted net income, totaling $251 million. Furthermore, the adjusted earnings per share (EPS) reached $0.84, exceeding analysts’ predictions by 7.7%.
Commitment to Infrastructure and Future Guidance
In alignment with its commitment to enhancing service, CMS Energy is actively investing in upgrading its infrastructure. This includes burying electric wires, installing monitoring sensors, and implementing new technologies aimed at building a more reliable grid. The recently announced five-year Electric Reliability Roadmap aims to minimize power outages for customers.
The company maintains its full-year adjusted EPS guidance of $3.29 to $3.35, reflecting confidence in its operational stability. For the current fiscal year ending in December, analysts project a 7.1% rise in adjusted EPS to reach $3.33. CMS Energy also boasts a strong earnings surprise history, having surpassed earnings estimates for four consecutive quarters.
Analyst Ratings Show Mixed Sentiment
CMS stock is currently rated as a “Moderate Buy” on average. Among the 17 analysts following the stock, 10 suggest a “Strong Buy,” while seven recommend a “Hold” rating.
This outlook is slightly more positive than the previous month, when only nine analysts recommended a “Strong Buy.” On November 1, BMO Capital analyst James Thalacker reaffirmed an “Outperform” rating for CMS, setting a price target of $76, indicating a potential rise of 10.9% from current levels.
Meanwhile, the average price target stands at $73.47, suggesting an upside of 7.2%. The highest target among analysts is $81, reflecting a potential premium of 18.2% over current share prices.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here. More news from Barchart
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