We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CMS Gains Momentum From Grid Modernization and Renewable Investments
Read MoreHide Full Article
Key Takeaways
CMS Energy gains from a supportive regulatory setting and stable regulated utility earnings.
CMS plans $20B in 2025-2029 upgrades and is expanding solar, wind and battery storage.
CMS faces rising costs tied to coal-ash facility closures and stricter emission regulations.
CMS Energy Corporation’s (CMS - Free Report) robust investment in infrastructure upgrades and renewable project is expected to continue to boost its overall performance. The company also benefits from stable and regulated utility operations in Michigan.
However, this Zacks Rank #3 (Hold) company faces risks related to unfavorable expenditures related to closure of solid waste disposal facilities for coal ash.
Factors Acting in Favor of CMS
CMS Energy benefits from a favorable regulatory environment that supports financial performance. More than 95% of the company's earnings come from its regulated electric and gas utilities, which provide a low-risk, stable revenue stream.
CMS Energy is investing heftily in infrastructure upgrades, replacements of old infrastructures and clean power generation to improve customer reliability and resiliency of its infrastructure. To achieve this, the company plans to make capital expenditures worth $20 billion during 2025-2029. Infrastructure upgrades help CMS to strengthen grid, enabling it to better withstand extreme weather conditions and improve its service reliability.
With increased social awareness about renewable energy expansion, economic and environmental, social, and governance (ESG) incentives are available for utility companies like CMS Energy. Therefore, CMS has been rapidly expanding its renewable generation portfolio in recent times. It plans to add 9 GW of solar and 4 GW of wind to its generation portfolio over the next two decades. It also plans to add more than 850 MW of battery storage by 2030.
Challenges Faced by CMS
Although the company has implemented multiple pollution-control measures across its power-generation fleet, tightening environmental regulations on carbon emissions continue to pose a significant challenge. As of Dec. 31, 2024, coal accounted for about 20% of its total electric generation mix.
The company incurs significant costs related to the construction, operation and closure of solid waste disposal facilities for coal ash. Consumers had earlier estimated that the company will have to incur capital expenditures of $240 million from 2025 through 2029 to comply with these regulations. This might adversely impact CMS Energy’s bottom line.
CMS’ Share Price Performance
In the past three months, shares of the company have risen 1.7% compared with the industry’s 8.5% growth.
NiSource’s long-term (three to five years) earnings growth rate is 7.97%. The Zacks Consensus Estimate for NI’s 2025 EPS implies an improvement of 7.4% from that recorded in 2024.
LNT’s long-term earnings growth rate is 6.57%. The company delivered an average earnings surprise of 13.5% in the last four quarters.
EVRG’s long-term earnings growth rate is 5.39%. The Zacks Consensus Estimate for EVRG’s 2025 EPS implies an improvement of 5.3% from that recorded in 2024.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
CMS Gains Momentum From Grid Modernization and Renewable Investments
Key Takeaways
CMS Energy Corporation’s (CMS - Free Report) robust investment in infrastructure upgrades and renewable project is expected to continue to boost its overall performance. The company also benefits from stable and regulated utility operations in Michigan.
However, this Zacks Rank #3 (Hold) company faces risks related to unfavorable expenditures related to closure of solid waste disposal facilities for coal ash.
Factors Acting in Favor of CMS
CMS Energy benefits from a favorable regulatory environment that supports financial performance. More than 95% of the company's earnings come from its regulated electric and gas utilities, which provide a low-risk, stable revenue stream.
CMS Energy is investing heftily in infrastructure upgrades, replacements of old infrastructures and clean power generation to improve customer reliability and resiliency of its infrastructure. To achieve this, the company plans to make capital expenditures worth $20 billion during 2025-2029. Infrastructure upgrades help CMS to strengthen grid, enabling it to better withstand extreme weather conditions and improve its service reliability.
With increased social awareness about renewable energy expansion, economic and environmental, social, and governance (ESG) incentives are available for utility companies like CMS Energy. Therefore, CMS has been rapidly expanding its renewable generation portfolio in recent times. It plans to add 9 GW of solar and 4 GW of wind to its generation portfolio over the next two decades. It also plans to add more than 850 MW of battery storage by 2030.
Challenges Faced by CMS
Although the company has implemented multiple pollution-control measures across its power-generation fleet, tightening environmental regulations on carbon emissions continue to pose a significant challenge. As of Dec. 31, 2024, coal accounted for about 20% of its total electric generation mix.
The company incurs significant costs related to the construction, operation and closure of solid waste disposal facilities for coal ash. Consumers had earlier estimated that the company will have to incur capital expenditures of $240 million from 2025 through 2029 to comply with these regulations. This might adversely impact CMS Energy’s bottom line.
CMS’ Share Price Performance
In the past three months, shares of the company have risen 1.7% compared with the industry’s 8.5% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the same industry are NiSource (NI - Free Report) , Alliant Energy (LNT - Free Report) and Evergy (EVRG - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NiSource’s long-term (three to five years) earnings growth rate is 7.97%. The Zacks Consensus Estimate for NI’s 2025 EPS implies an improvement of 7.4% from that recorded in 2024.
LNT’s long-term earnings growth rate is 6.57%. The company delivered an average earnings surprise of 13.5% in the last four quarters.
EVRG’s long-term earnings growth rate is 5.39%. The Zacks Consensus Estimate for EVRG’s 2025 EPS implies an improvement of 5.3% from that recorded in 2024.