CMS Energy (CMS) to Report Q3 Earnings: What's in the Cards?

CMS Energy Corporation CMS is set to report third-quarter 2020 financial results on Oct 29, before market open. In the last reported quarter, the company delivered an earnings surprise of 8.89%.

In the trailing four quarters, CMS Energy came up with an earnings surprise of 9.22%, on average.

Factors to Consider 

During most part of the July-September 2020 quarter, the company’s service territories experienced warmer-than-normal temperatures. These are likely to have resulted in higher electricity demand for cooling purposes, which in turn are likely to have boosted CMS Energy’s top line in the third quarter.

CMS Energy Corporation Price and EPS Surprise

CMS Energy Corporation Price and EPS Surprise

CMS Energy Corporation price-eps-surprise | CMS Energy Corporation Quote

Notably amid the pandemic, the company’s residential sales have remained elevated. On the other hand, since the middle of second quarter, the company started witnessing a gradual recovery in its commercial and industrial sales, which according to management have started to return to pre-pandemic levels, particularly in the higher margin commercial segment. Anticipating these trends to have continued in the third quarter as well, we remain optimistic about the company’s top-line growth.  

In line with this, the Zacks Consensus Estimate for third-quarter revenues is pegged at $1.58 billion, indicating 2.4% improvement from the year-ago quarter’s reported figure.

In August, a sustained line of thunderstorms called derecho raced across the central United States, which also brought strong wind gusts and quite a few tornedos in the service territory of CMS Energy. In September, again its service territories suffered some severe storm activities. No doubt these caused infrastructural damage for this utility provider, while its customers suffered widespread power outage.

This must have pushed up the company’s storm restoration expenses, thereby impacting its bottom line. Moreover, in the wake of the pandemic, CMS Energy has been incurring additional expenses like quarantine related expenses and potential sequestration related costs, which might have also dragged down its Q3 earnings.

For the third quarter, the Zacks Consensus Estimate for earnings is pegged at 68 cents, which indicates a 6.9% decline from the figure reported in the year-ago quarter.

Earnings Whispers

Our proven model predicts an earnings beat for CMS Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: CMS Energy has an Earnings ESP of +0.15%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Here are some players from the Utilities sector that also have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Southern Company SO is set to release third-quarter earnings on Oct 29. It has an Earnings ESP of +0.54% and a Zacks Rank #3, presently.

Pinnacle West Capital PNW is set to release third-quarter earnings on Oct 30. It has an Earnings ESP of +0.98% and a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

NiSource NI is expected to release third-quarter numbers on Nov 2. It has an Earnings ESP of +25.00% and a Zacks Rank of 3 currently.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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