CMS Meets Q4 Earnings Ests, Gives View

Zacks Equity Research

Michigan-based CMS Energy Corp. (CMS) posted fourth-quarter 2013 earnings per share of 37 cents on both adjusted and GAAP basis. The quarterly figure was on par with the Zacks Consensus Estimate, but increased 48% on a year-over-year basis.

For 2013, CMS Energy reported earnings of $1.66 per share compared with $1.42 per share in 2012. The yearly figure surpassed our projection by a penny.

Operational Performance

Operating revenue in the reported quarter grossed $1,736 million, up 4.0% year over year. The top line beat the Zacks Consensus Estimate by $5.0 million.

In 2013, operating revenue was $6,566 million, up 5.0% year over year. The top line was however short of the Zacks Consensus Estimate by $64.0 million.

Total operating expenses were up 1.0% year over year to $1,472 million in the fourth quarter. The increase in expenses notwithstanding, operating income spiked 24.5% year over year to $264 million in the reported quarter, largely on the back of higher revenues.

Financial Position

CMS Energy ended 2013 with cash and cash equivalents of $172 million, surging from $93 million as of Dec 31, 2012. Total debt, capital and finance leases rose to $7,879 million from $7,381 million as of Dec 31, 2012.  


CMS Energy increased its earnings forecast for 2014 to $1.74 to $1.78 per share from the prior guidance of $1.73 to $1.78 per share. This is consistent with its long-term goal of 5% to 7% annual earnings per share growth.

Business Highlights

During the quarter, the company announced its plan to buy a 540 megawatt clean-burning natural gas power plant for $155.0 million in Michigan.

Michigan's largest utility and CMS Energy's main subsidiary, Consumers Energy also has plans to invest about $15 billion in its operations over the next 10 years to enhance customer value.

This comprises improvement in the delivery capacity of Consumers Energy's natural gas system through investments in its 15 gas storage fields, compressor stations and gas main replacement program.

The company continued its construction of the $120 million Southwest Michigan Pipeline to strengthen gas delivery reliability and support strategic supply purchases.

At the Peer

American Electric Power Company Inc. (AEP) reported fourth quarter 2013 operating earnings of 60 cents per share, beating the Zacks Consensus Estimate of 56 cents by 7.1%. The quarterly figure also improved 20% from the year-ago profit of 50 cents.

Our Take

Going forward, the company is committed to providing safe and affordable energy to its customers. It is also contributing to Michigan's economic growth through $7 billion of investment in operations through 2017.

The company’s focus on reducing costs, enhancing reliability, and investments in Michigan would help in improving the top and the bottom line. CMS Energy carries a Zacks Rank #2 (Buy).

However, stocks to look out for in the space are National Grid plc (NGG) and NRG Yield, Inc. (NYLD), both with a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on CMS
Read the Full Research Report on NYLD
Read the Full Research Report on AEP
Read the Full Research Report on NGG

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