CMS Energy Inc.
) is slated to release its second quarter 2013 earnings results
before the market opens on Jul 25. Last quarter, the company
reported a positive earnings surprise of 15.22%. Let's see how
things are shaping up for the utility service provider for this
Factors to Consider This Quarter
The harsh winter weather primarily drove CMS Energy's earnings
in the first quarter of 2013. The company's earnings, however,
could take a hit in 2Q owing to the fragile economic condition in
its main service territory of Michigan.
Nevertheless, its electric service reliability improved 20% in
the second quarter which resulted in smooth power services. This
will certainly act as a catalyst to CMS Energy's earnings.
Moreover, the company commenced its gas purchase agreement in
early Apr 2013 with BreitBurn Operating L.P. which would support
CMS Energy's supply commitments to a wide customer base.
Furthermore, its focus on achieving an effective operational
mix will prove to be a critical income driver. CMS Energy's
renewable development initiatives, as evident from the Cross
Winds Energy program in Tuscola County, will help to spur
Our proven model does not conclusively show that CMS Energy is
likely to beat earnings this quarter. This is because a stock
needs to have both a positive earnings Expected Surprise
Prediction (ESP) (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
Negative Zacks ESP:
The Most Accurate estimate stands at 34 cents while the
Zacks Consensus Estimate is lower at 35 cents. This comes to a
difference of -2.86%.
Zacks Rank #3 (Hold):
CMS Energy's Zacks Rank #3 (Hold) lowers the predictive power of
ESP. This combined with an ESP of -2.86% makes surprise
prediction difficult. We caution against stocks with Zacks Ranks
#4 and 5 (Sell rated stocks) going into the earnings
announcement, especially when the company is seeing negative
Other Stocks to Consider
Here are some companies you may want to consider as our model
shows they have the right combination of elements to post an
earnings beat this quarter:
Integrys Energy Group Inc.
), Earnings ESP of +9.38% and a Zacks Rank #1 (Strong Buy).
National Gas Fuel Company
), Earnings ESP of +3.08% and a Zacks Rank #2 (Buy).
Black Hills Corp.
), Earnings ESP of +2.33% and a Zacks Rank #3 (Hold).
BLACK HILLS COR (BKH): Free Stock Analysis
CMS ENERGY (CMS): Free Stock Analysis Report
NATL FUEL GAS (NFG): Free Stock Analysis
INTEGRYS ENERGY (TEG): Free Stock Analysis
To read this article on Zacks.com click here.