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CMS Energy (CMS) to Report Q3 Earnings: What's in the Cards?

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CMS Energy Corporation (CMS - Free Report) is slated to report third-quarter 2021 results on Oct 28, before the opening bell.

In the last reported quarter, the company delivered an earnings surprise of 19.57%. CMS Energy has a trailing four-quarter earnings surprise of 9.51%, on average.

Factors to Note

During most part of the third quarter, the company’s service territories witnessed warmer than normal temperatures. This is likely to have boosted electricity demand for cooling purposes, among the company’s customers.  Furthermore, its service territories experienced significant precipitation levels throughout the quarter, resulting in wet weather conditions.

Warm weather and higher precipitation are likely to have benefited its third-quarter performance. However, a serious drought condition in certain parts of its service territories might have weighed on the to-be-reported quarter’s top line. This is because utility companies depend heavily on water for cooling down systems when generating electricity; a serious drought condition may have interrupted its supply of electricity to its customers.

Meanwhile, with the U.S. economy gradually recovering over the past couple of quarters, an improvement in industrial and commercial sales might have favorably contributed to the revenues in the quarterto be reported. Thus, overall factors are likely to have positively impacted the company’s third-quarter performance.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $1.60 billion, suggesting growth of 1.9% from the year-ago quarter.

From the cost perspective, the company has been successful in eliminating waste through its Consumers Energy Way (CE Way), which might have resulted in cost savingsin the to-be-reported quarter.

However, during the third quarter, CMS Energy service area experienced tornadoes and storms with tropical force wind gusts. Such severe weather conditions often damage the electric poles and infrastructure of utility providers like CMS Energy. This may have increased the company’s operating expenses for restoration and repairing, thereby outweighing the positive impact from cost savings through CE Way initiatives.This is likely to get reflected in the third-quarter bottomline.

The Zacks Consensus Estimate for third-quarter earnings is pegged at 52 cents per share, indicating a decline of 32.5% from the prior-year reported figure.

CMS Energy Corporation Price and EPS Surprise

CMS Energy Corporation Price and EPS Surprise

CMS Energy Corporation price-eps-surprise | CMS Energy Corporation Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for CMS Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here.

Earnings ESP:The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CMS Energy currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are three Utilities players you may want to consider, as these have the right combination of elements to post an earnings beat this season:

AES Corporation (AES - Free Report) has an Earnings ESP of +3.53% and a Zacks Rank #3.

Pacific Gas & Electric Co. (PCG - Free Report) has an Earnings ESP of +5.66% and a Zacks Rank #3.

Edison International(EIX - Free Report) has an Earnings ESP of +1.46% and a Zacks Rank #3.