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CMS Energy Corporation Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Simply Wall St
·4 min read

Last week, you might have seen that CMS Energy Corporation (NYSE:CMS) released its quarterly result to the market. The early response was not positive, with shares down 3.8% to US$63.33 in the past week. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at US$1.6b, statutory earnings beat expectations by a notable 10%, coming in at US$0.76 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on CMS Energy after the latest results.

See our latest analysis for CMS Energy

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earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from CMS Energy's 14 analysts is for revenues of US$7.12b in 2021, which would reflect a satisfactory 6.7% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 6.1% to US$2.86. In the lead-up to this report, the analysts had been modelling revenues of US$7.15b and earnings per share (EPS) of US$2.86 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$65.74. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on CMS Energy, with the most bullish analyst valuing it at US$74.00 and the most bearish at US$47.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting CMS Energy's growth to accelerate, with the forecast 6.7% growth ranking favourably alongside historical growth of 1.6% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.1% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that CMS Energy is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$65.74, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple CMS Energy analysts - going out to 2024, and you can see them free on our platform here.

Before you take the next step you should know about the 2 warning signs for CMS Energy (1 doesn't sit too well with us!) that we have uncovered.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.