CMS Energy Corporation (CMS), headquartered in Jackson, Michigan, operates as an energy company that provides electricity and natural gas to its customers. Valued at $19.9 billion by market cap, the company also invests in and operates non-utility power generation plants in the U.S. and abroad.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and CMS perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the regulated electric utilities industry. CMS Energy is investing $7 billion in infrastructure upgrades and increasing renewable energy projects to $3 billion. The company is focused on improving service reliability and customer satisfaction, with plans for a 250-MW solar energy center and over 1,500 new fast charging locations by 2030. CMS is taking a proactive approach to the energy transition and meeting the growing demand for clean energy.
Despite its notable strength, CMS slipped 7.9% from its 52-week high of $72.40, achieved on Oct. 24. Over the past three months, CMS stock has declined 5.2%, underperforming the Nasdaq Composite’s ($NASX)10% gains during the same time frame.
In the longer term, shares of CMS rose 12% over the past six months, outperforming NASX’s six-month gains of 11.7%. However, the stock climbed 16.5% over the past 52 weeks, underperforming NASX’s solid 31.8% returns over the last year.
To confirm the bullish trend, CMS has been trading above its 200-day moving average since early March, with slight fluctuations. However, the stock is trading below its 50-day moving average since late October, experiencing some fluctuations.
CMS is facing challenges with regard to environmental regulations on carbon emissions, despite having implemented pollution-control measures in its power generation facilities. With nearly 20% of its electricity generation still coming from coal, the company is incurring significant costs related to managing solid waste disposal facilities for coal ash. This ongoing issue raises concerns about the company's performance in meeting environmental standards.
On Oct. 31, CMS shares closed down marginally after reporting its Q3 results. Its adjusted EPS of $0.84 exceeded Wall Street expectations of $0.78. The company’s revenue was $1.7 billion, failing to meet Wall Street forecasts of $1.8 billion. CMS expects full-year adjusted EPS to be between $3.29 and $3.35.
CMS’ rival, American Electric Power Company, Inc. (AEP) shares lagged behind the stock, with 6.7% gains over the past six months and 15.5% returns over the past 52 weeks.
Wall Street analysts are moderately bullish on CMS’ prospects. The stock has a consensus “Moderate Buy” rating from the 18 analysts covering it, and the mean price target of $73.35 suggests a potential upside of 10% from current price levels.