CMS Energy Corporation (CMS) will release its fourth-quarter 2014 financial results before the opening bell on Jan 29, 2015. In the prior quarter, this utility reported a negative earnings surprise of 9.76%. CMS Energy currently has a Zacks Rank #2 (Buy). Let’s see how things are shaping up for this announcement.
Factors Affecting this Quarter
CMS Energy’s subsidiary Consumers Energy continues to invest in gas storage system to efficiently serve its 1.7 million customers in Michigan. The investments are aimed at enhancing service reliability and effectively meeting customer demand.
Moreover, the company has successfully executed its cost-saving initiatives for the last eight years. The cost savings allowed CMS Energy to fund nearly 100% of its capital expenditure in 2014.
The improvement in the Michigan economy has boosted industrial sales. This will likely have a positive impact on the company’s fourth quarter results.
Earnings Whispers?
Our proven model however does not conclusively show that CMS Energy will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP: This is because the Most Accurate estimate stands at 36 cents per share, in line with the Zacks Consensus Estimate, resulting in a 0.00% ESP.
Zacks Rank: CMS Energy’s Zacks Rank #2 when combined with a 0.00% ESP makes an earnings beat difficult to predict.
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 estimate revisions.
Stocks to Consider
Here are some utility companies worth considering as our model shows they have the right combination of elements to post an earnings beat this quarter.
PNM Resources, Inc. (PNM) has an earnings ESP of +8.70% and a Zacks Rank #2.
PG&E Corporation (PCG) has an earnings ESP of +3.70% and a Zacks Rank #2.
Wisconsin Energy Corp. (WEC) has an earnings ESP of +1.75% and a Zacks Rank #2.
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