Shares of utility company
CMS Energy Corporation
) reached a 52-week high of $29.61 on Apr 26, 2013. Mich.-based
CMS Energy has seen its stock price climb 19.78% since the
beginning of the year.
We remain upbeat on the company's near-term prospects, supported
by its solid first quarter 2013 earnings results, attractive
fundamentals and a positive outlook. These factors are reflected
in CMS Energy's Zacks Rank #2 (Buy), implying that it is expected
to outperform the broader U.S. equity market over the next one to
Why this Bullishness?
On Apr 25, 2013, CMS Energy posted first-quarter 2013 earnings
per share of 53 cents on both adjusted and GAAP basis, beating
the Zacks Consensus Estimate of 46 cents. Earnings were 43.2%
higher than 37 cents earned in the year-ago quarter. CMS Energy
registered positive earnings surprises for four quarters in a
row, with an average beat of 6.62%. A colder-than-normal weather
spiked natural gas deliveries, driving better-than-expected
results in the reported quarter.
CMS Energy continues to strengthen its distribution system and
generation assets through projects such as advanced metering
infrastructure (AMI) and renewable (wind) investments. Consumers
Energy, principal subsidiary of CMS Energy, intends to invest
about $7 billion in its operations through 2017.
With its robust pipeline of regulated investment opportunities
and favorable regulatory treatment, the company remains on track
to achieve its long-term EPS growth target of 5% to 7% and annual
rate base growth of 6% to 7%. In addition, return on equity (ROE)
of the company is 14.5%, higher than the peer group average of
CMS Energy has consistently paid dividends to its shareholders
and has raised its quarterly dividend seven times in as many
years. The incremental dividend reflects the strength and
successful execution of the company's business strategy. The
current annual dividend is $1.02 per share, with a dividend yield
Going forward, our bullish outlook for the company is supported
by stable regulated utility operations, favorable regulatory
policies in Michigan, higher rates, investment plans and a robust
We expect long-term earnings growth of 5.97%. The Zacks Consensus
Estimate for 2013 and 2014 are $1.65 and $1.74, respectively.
This reflects year-over-year growth of 6.2% in 2013 and 6.0% in
Other Stocks to Consider
In addition to CMS Energy, there are other utilities like
Brookfield Infrastructure Partners L.P.
Pike Electric Corp.
Empresa Nacional de Electricidad S.A.
) that offer great value and are worth buying now. All these
firms sport a Zacks Rank #1 (Strong Buy).
BROOKFIELD INFR (BIP): Free Stock Analysis
CMS ENERGY (CMS): Free Stock Analysis Report
ENDESA-CHILE (EOC): Free Stock Analysis
PIKE ELECTRIC (PIKE): Free Stock Analysis
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