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CMS Energy Corporation (CMS - Analyst Report) is scheduled to reports its first quarter 2013 financial results on Apr 25. The company posted 4.17% positive earnings surprise in the preceding quarter. Let’s see how things are shaping up for this announcement.

Earnings Whispers?

Our proven model shows that the utility company CMS Energy is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP:  Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +8.7%. This is a leading indicator of a likely positive earnings surprise for shares.

Zacks #2 Rank (Buy): Stocks with Zacks Rank #1, Zacks Rank #2 and Zacks Rank #3 have a significantly higher chance of beating earnings. The Sell rated stocks (Zacks Rank #4 and Zacks Rank #5) should never be considered going into an earnings announcement.

Hence, the combination of a Zacks Rank #2 (Buy) and +8.7% ESP makes us bullish on CMS Energy for the first quarter.

Growth Factors for 1Q

Recently, Consumers Energy, a subsidiary of CMS Energy, declared that it curtailed natural gas fuel costs by 15%.

Since Feb 2012, the company has reduced natural gas prices by 26%. The latest cut marks the largest price reduction in the company’s recent history. In fact, the company indicated that the prices it charges for natural gas have hit a 10-year low. These efforts to trim gas fuel costs will assist Michigan families and businesses to save approximately $200 million by 2014.

Also, the company continues to invest in its natural gas infrastructure to take advantage of lower-cost supplies. This would benefit customers both at present and in the future. Its projects include expansion of gas compressor stations and replacement of natural gas pipelines.

The company intends to reduce its operations and maintenance costs by 4% this year and also plans to cut down the number of employees by 3%. This will definitely help the company to boost its profits. Further, management has rewarded shareholders by returning a substantial portion of the free cash flow through incremental dividends over the past three years. Currently, the company pays a quarterly dividend on its common stock of 25.5 cents per common share ($1.02 per share annualized) with a dividend yield of 3.51%. These factors make the stock attractive for investors.

Other Stocks to Consider

CMS Energy is not the only company looking up this earnings season. We are also likely to see earnings beats coming from these three industry peers:

Brookfield Infrastructure Partners L.P. (BIP - Snapshot Report) has an earnings ESP of +1.19% and Zacks Rank #1 (Strong Buy).

Cleco Corporation (CNL - Snapshot Report) has an earnings ESP of +8.16% and Zacks Rank #3 (Hold).

American Electric Power Co. Inc. (AEP - Analyst Report) has an earnings ESP of +2.47% and Zacks Rank #3 (Hold).

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