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CMS Energy (CMS) Down 2.6% Since Earnings Report: Can It Rebound?

Zacks Equity Research
Updated

A month has gone by since the last earnings report for CMS Energy Corporation CMS. Shares have lost about 2.6% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is CMS 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 drivers.

CMS Energy Beats on Q1 Earnings, Retains '18 Guidance

CMS Energy reported first-quarter 2018 adjusted earnings per share of 86 cents, beating the Zacks Consensus Estimate of 82 cents. Quarterly earnings were up 21.12% from the year-ago quarter’s figure of 71 cents.

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The improvement can be attributed to favorable weather conditions and cost-saving strategies.

Operational Performance

CMS Energy’s operating revenues came in at $1,953 million, which surpassed the Zacks Consensus Estimate of $1,829 million by 6.8%. Moreover, revenues rose 6.8% on a year-over-year basis.

The company’s operating expenses were up 10.3% year over year to $1,590 million.

In first-quarter 2018, operating income was $363 million, down 6.4% from $388 million in the year-ago quarter.

CMS Energy’s interest charges rose 3.7% to $111 million, compared with $107 million in the year-ago quarter.

Financial Condition

CMS Energy had cash and cash equivalents of $195 million as of Mar 31, 2018, up from $182 million as of Dec 31, 2017.

As of Mar 31, 2018, total debt, capital leases and financing obligations were $10,066 million, down from $10,185 million as of Dec 31, 2017.

Net cash from operating activities was $708 million as of Mar 31, 2018, compared with $646 million as of Dec 31, 2017.

Guidance

CMS Energy reaffirmed its guidance for 2018 adjusted earnings at $2.30-$2.34 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

CMS Energy Corporation Price and Consensus

 

CMS Energy Corporation Price and Consensus | CMS Energy Corporation Quote

VGM Scores

Currently, CMS has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. However, the stock was also allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Zacks style scores indicate that the company's stock is suitable for value and growth investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Notably, CMS has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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