CMS Energy Corporation’s CMS regulated electric power operations in Michigan generate relatively stable earnings. The company’s ambitious natural gas system expansion and robust investment in infrastructure development project are expected to boost earnings growth.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) utility is a promising pick for investors.
The Zacks Consensus Estimate for 2019 earnings per share is pegged at $2.49 on $6.99-billion revenues. The bottom and the top line are expected to rise 6.87% and 1.63% year over year, respectively.
The consensus mark for 2020 earnings is pegged at $2.66 per share on revenues of $7.14 billion. The bottom line suggests a 6.53% increase year over year. Moreover, the top line calls for a 2.23% improvement on a year-over-year basis.
The company’s long-term (three to five years) earnings growth is pegged at 6.40%.
Price Performance (One Year)
In the past year, shares of CMS Energy have returned 27.4% compared with the industry’s growth of 14.6%. The figure is higher than the S&P 500 index’s 1.6% in the said period.
The company is focused on strengthening and upgrading its electric and natural gas systems to provide 24X7 uninterrupted services. Between 2019 and 2023, the company plans to invest around $6.1 billion in its electricity operations, which includes $4.2 billion for electricity distribution activities and $1.9 billion for electric supply. The company expects overall sales growth of about 1% on a conservative side at its utility operations through 2021. The company plans to deploy around $5.1 billion for its projects under gas infrastructure investment between 2019 and 2023, to enhance pipeline integrity and safety.
Emission Reduction Goal
CMS Energy is focused on expanding its renewable portfolio. The company, through its non-utility businesses, continues to pursue the development of renewable generation projects. Along with this, the company is trying to reduce carbon emission. Till 2018, it lowered carbon emissions by more than 35% from 2005 level. It also reduced its combined percentage of electric supply from coal by 16 percentage points since 2015. The company aims to cut its carbon emissions by more than 90% by 2040 through the economic development of up to 6,000 MW of solar and 550 MW of wind generation.
Other Stocks to Consider
Some other top-ranked stocks in the utility sector are IDACORP Inc IDA, NRG Energy, Inc NRG and The AES Corporation AES. NRG Energy sports a Zacks #1 (Strong Buy), while IDACORP and The AES Corporation hold a Zacks #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
IDACORP, NRG Energy and AES Corporation delivered average positive earnings surprise of 7.79%, 11.64% and 4.85%, respectively, in the last four quarters.
Long-term earnings growth for IDACORP, NRG Energy and AES Corporation is pegged at 3.85%, 36.26% and 8.49%, respectively.
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