CMS Energy Corporation (CMS): The Old Roof Became A New Floor

CMS Energy Corporation (NYSE:CMS) is now being followed by Goldman, as they initiated the stock at Neutral on January 17. Analysts at BofA/Merrill, shed their positive views on October 12 by lowering it fromBuy to Neutral. The stock won favor of Argus analysts who expressed their confidence in it using an upgrade from Hold to Buy on September 10. Citigroup, released new analyst coverage on April 13, calling the stock is Neutral.

CMS stock dropped -0.27% in recent trade and currently has a stock-market value of $15.53B. The shares finished at $55.15, after trading as low as $54.98 earlier in the session. It hit an intraday high Thursday at $55.485. Trading activity significantly weakened as the volume at ready counter decreased to 1,874,708 shares versus 2,316,710 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 2,292,936 shares. The stock is now 29.7% above against its bear-market low of $42.52 on June 11, 2018. It has retreated -0.62% since it’s 52-week high of $55.49 reached in March. Now the market price is up 28.38% on the year and up 11.08% YTD.

Wall Street’s most bullish CMS Energy Corporation (NYSE:CMS) analysts are predicting the share price to blow past $58 per share during the next 12 months. The current median share price forecast by them is $54.5, suggesting that the stock could increase -1.18% in that time frame. The average price target of $54.57 calls for a nearly -1.05% increase in the stock price.

CMS Energy Corporation (CMS)’s 50 day simple moving average (SMA 50) price is $52.12 and its 200-day simple moving average (SMA 200) price is $49.69. The company’s stock currently has a total float of 281.45M shares. Its weekly volatility is hovering around 0.82% and felt 1.07% volatility in price over a month. On the upside, the share price will test short term resistance at around $55.43. On a downside, the stock is likely to find some support, which begins at $54.92. The failure to get near-term support could push it to $54.7.

When looking at valuations, CMS Energy Corporation (CMS) has a pricey P/E of 24.86x as compared to industry average of 14.58x. Moreover, it trades for 20.58 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 3.28x price/book and 2.26x price/sales. Compared to others, CMS Energy Corporation is in a different league with regards to profitability, having net margins of 9.6%. To put some perspective around this, the industry’s average net margin is 40.61%. CMS’s ROE is 14%, which is also considerably better than the industry’s ROE of 13.75%. It’s also not liquid in the near term, with a current ratio of 0.9. The stock has a debt/capital of 2.48.

Shares of CMS have gained 7.5% since the company’s most recent earnings report. Over the past 12 fiscal quarters, CMS Energy Corporation (NYSE:CMS) has topped consensus earnings estimates in 7 quarters (58%), missed earnings in 3 quarters (25%), whereas at 2 occasion EPS met analyst expectations. CMS last reported earnings that receded expectations. The company raked in $0.4 per share, -58.76% change on the same period last year. That was worse than consensus for $0.4. Revenue for the recent quarter stood at $1.83 billion, up 3% on last year and above the $1.59 billion predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $1.92 billion to $2.11 billion, which should be compared with $1.86 billion generated last year. EPS is seen in a range of $0.78 to $0.99, against the $0.8 reported a year ago.