CMS Energy Corporation (CMS) reported second-quarter 2014 earnings per share of 30 cents both on an adjusted and GAAP basis. Quarterly earnings surpassed the Zacks Consensus Estimate of 26 cents by 15.4% and the year-ago number by a penny on higher revenues.
Operational Performance
In the quarter under review, CMS Energy’s operating revenues came in at $1,468 million, beating the Zacks Consensus Estimate of $1,382 million by 6.2%. On a year- over-year basis, revenues climbed 4.4% from $1,406 million.
The company’s operating expenses in the second quarter were $1,233 million, up around 5% year over year.
Despite the rise in operating expenses, operating income edged up 1.3% to $235 million from $232 million a year ago.
In the reported quarter, CMS Energy’s interest charges declined roughly 1% year over year to $101 million.
Financial Condition
CMS Energy had cash and cash equivalents of $0.36 billion as of Jun 30, 2014, up from $0.17 billion as of Dec 31, 2013.
As of Jun 30, 2014, total debt, capital leases and financing obligations rose to $8.03 billion from $7.88 billion as of Dec 31, 2013.
During the first half of 2014, cash from operating activities was $0.94 billion versus $1.10 billion in the year-ago comparable period.
Guidance
CMS Energy narrowed its earnings forecast for 2014 to $1.76–$1.78 per share from the previous projection of $1.74–$1.78 per share, considering the strong first half results.
The company also increased the low end of its long-term adjusted earnings growth guidance to 6%–7% from prior estimate of 5%–7%.
At the Peers
American Electric Power Co., Inc. (AEP) is slated to release its second-quarter 2014 earnings on Jul 25. The Zacks Consensus Estimate is pegged at 75 cents.
Wisconsin Energy Corp. (WEC) is slated to release its second-quarter 2014 earnings on Jul 30. The Zacks Consensus Estimate is currently at 52 cents.
Our Take
CMS Energy continues to invest in utility infrastructure as well as renewable ventures besides pursuing an inorganic growth strategy.
In the last five years, the company invested over $400 million in its electricity operations. In addition, CMS Energy is currently investing $150 million to extend its gas utility systems.
Apart from infrastructure projects, CMS Energy intends to acquire a 540 megawatt clean-burning natural gas power plant. The transaction is expected to close in 2015.
As far as renewable projects are concerned, Cross Winds Energy Park is expected to come online by this year.
The aforesaid initiatives will enable CMS Energy to meet increasing power demand and provide reliable services, besides meeting the government’s environmental mandates.
CMS Energy currently has a Zacks Rank #3 (Hold). However, a better-ranked stock in the same sector is Westar Energy, Inc. (WR), carrying a Zacks Rank #1 (Strong Buy).
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