CMS Energy (CMS) Earnings: What's in Store this Season?
CMS Energy Corporation CMS will release its fourth-quarter 2015 financial results on Feb 4, 2016.
In the previous quarter, the utility provider had reported a positive earnings surprise of 8.16%. Let’s see how things are turning out for this quarter.
Factors to Consider
CMS Energy’s regulated electric power operations in Michigan generate a relatively stable and growing earnings stream. It is currently focused on several issues such as capacity maximization, reliability improvement, clean power generation and infrastructure upgrade.
During the third-quarter earnings call, the company said that it plans to increase its investment by 16% of market cash over the next decade. It added that there is an opportunity to increase investment by another 30% or $5 billion to over $20 billion. These initiatives will enable the company to provide reliable services to its customers and achieve its long-term EPS growth target of 5–7%. Given its stable performances, CMS Energy had earlier already raised the bottom-end of its 2015 adjusted earnings per share guidance. The new range reflects 6% to 7% growth over last year.
Management also said that it enjoys a good position with considerable benefits from the Arctic blast that took place earlier in 2015, in addition to better-than-planned cost reductions. The company has used the surplus for reliability improvements for its utility customers and accelerating outages to enhance the outlook for the future.
Amongst the investor friendly moves, during the fourth quarter, the company increased the quarterly dividend on its common stock by 7% to 31 cents per share from 29 cents.
Earnings Whispers
Our proven model does not conclusively show that CMS Energy is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Zacks ESP: CMS Energy has a 0.00% Earnings ESP. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 37 cents.
Zacks Rank: CMS Energy’s Zacks Rank #3, when combined with a 0.00% ESP, makes a surprise prediction difficult.
We note that Sell-rated stocks (#4 or #5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some stocks in the utility sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:
AES Corporation AES has an earnings ESP of +3.13% and a Zacks Rank #3. It will report quarterly results on Feb 24.
Consolidated Edison ED has an earnings ESP of +1.82% and a Zacks Rank #3. It will report quarterly results on Feb 18.
Edison International EIX has an earnings ESP of +1.67% and a Zacks Rank #3. It will report quarterly results on Feb 23.
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CMS ENERGY (CMS): Free Stock Analysis Report
EDISON INTL (EIX): Free Stock Analysis Report
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AES CORP (AES): Free Stock Analysis Report
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