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Michigan-based CMS Energy Corporation (CMS - Analyst Report) announced earnings for the fourth quarter 2012 of 25 cents per share on both adjusted and GAAP basis, beating the Zacks Consensus Estimate of 24 cents. The results were also above the year-ago earnings on both adjusted and GAAP basis of 15 cents per share.

Full-year 2012 adjusted earnings came in at $1.55 per share, in line with the Zacks Consensus Estimate. The reported figure was also higher than full year 2011 earnings of $1.45 per share. On a reported basis, full-year 2012 earnings were $1.42 per share versus full year 2011 earnings of $1.58 per share.

Operational Performance

Operating revenue of CMS Energy in the quarter under review grossed $1.67 billion, up from the prior year's $1.62 billion.  Results were however lower than the Zacks Consensus Estimate of $1.82 billion. Operating expense in the quarter rose to $1.46 billion from $1.45 billion year over year.

CMS Energy reported operating income of $212 million, higher than $174 million in the year-ago quarter. Overall, the company reported net income of $67 million compared with a net income of $41 million in the year-ago quarter.

CMS Energy’s revenue decreased to approximately $6.25 billion in full year 2012 versus $6.50 billion in full year 2011. It was also below the Zacks Consensus Estimate of $6.52 billion.

Financial Position

CMS Energy ended full year 2012 with cash and cash equivalents of $93 million, lower than $161 million at the end of full year 2011. Total debt, capital and finance leases rose to $7.38 billion versus $7.09 billion year over year. The company generated cash flow from operations of $1.24 billion, higher than $1.17 billion at full year-end 2011.

Guidance

CMS Energy affirmed its guidance for full year 2013 adjusted earnings in the range of $1.63–$1.66 per share. This is consistent with the company's long-term plan of 5%–7% annual earnings growth.

Our Take

CMS Energy is the holding company of Consumers Energy Company (Consumers) and CMS Enterprises Company (Enterprises). Consumers is an electric and gas utility company that provides electricity and natural gas to Michigan’s residents, and serves customers in all 68 counties in Michigan’s lower region. Enterprises, through its subsidiaries and equity investments, is engaged primarily in independent power production.

CMS Energy’s regulated electric power operations in Michigan generate a relatively stable and growing earnings stream. Over the long term, the company presents a strong growth story, given its favorable regulatory policies in Michigan, higher rates, a robust balance sheet and incremental dividend. Thus, the company presently retains a short-term Zacks Rank #2 (Buy).

Other Stocks to Consider

Other stocks to consider are Brookfield Infrastructure Partners L.P. (BIP - Snapshot Report), Pike Electric Corporation (PIKE - Snapshot Report) and TransAlta Corp. (TAC - Snapshot Report), all carrying a Zacks Rank #1 (Strong Buy).

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