A month has gone by since the last earnings report for CMS Energy (CMS). Shares have lost about 6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CMS Energy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CMS Energy Q1 Earnings Beat Estimates, Revenues Miss
CMS Energy reported first-quarter 2020 adjusted earnings per share (EPS) of 86 cents, which surpassed the Zacks Consensus Estimate of 77 cents by 11.7%.
Including one-time items, the company posted GAAP earnings of 85 cents per share in the reported quarter, up from 75 cents generated in the year-ago quarter.
The year-over-year uptick in the bottom line can be attributed to timely recovery of customer investments and cost management.
In the quarter under review, CMS Energy’s operating revenues totaled $1,864 million, which missed the Zacks Consensus Estimate of $2,101 million by 11.3%. The top line also fell 9.5% on a year-over-year basis.
The company’s operating expenses declined 12% to $1,496 million in the quarter under review.
Operating income in the first quarter was $368 million, up 2.5% from $359 million in the year-ago quarter.
CMS Energy’s interest charges were $137 million, up from $121 million in the year-ago period.
CMS Energy had cash and cash equivalents of $834 million as of Mar 31, 2020, up from $140 million as of Dec 31, 2019.
As of Mar 31, 2020, total debt, capital leases and financing obligations (excluding securitization debt) were $14,086 million, up from $12,996 millionas of Dec 31, 2019.
At the end of first quarter 2020, cash from operating activities amounted to $201 million compared with $617 million in the year-ago quarter.
CMS Energy reiterated its 2020 adjusted earnings per share guidance in the range of $2.64-$2.68, as the ultimate impact of the coronavirus pandemic on Michigan's economy and the company’s business remain uncertain. Currently, the Zacks Consensus Estimate for the company’s current-year earnings is pegged at $2.60, lower than the company provided guidance.
The guidance range indicates 6-8% growth from the year-ago reported figure.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, CMS Energy has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, CMS Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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