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Will CMS Energy (CMS) Disappoint Investors in Q4 Earnings?

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CMS Energy Corporation (CMS - Free Report) is set to report fourth-quarter 2017 financial results on Feb 14, before the market opens.

Last quarter, the company posted a positive earnings surprise of 12.73%. Notably, it surpassed the Zacks Consensus Estimate in two of the trailing four quarters, the average beat being 0.61%.

Let’s see how things are shaping up at the company prior to this announcement.

Factors at Play

CMS Energy’s regulated electric power operations in Michigan generate relatively stable earnings and a growing earnings stream.

In recent times, the company has been focusing on capacity maximization, reliability improvement and infrastructure upgrade. This in turn is expected to boost its bottom line as is evident from management’s raised guidance for 2017 earnings. Moreover, the absence of discretionary activities after the second half of 2016, such as debt pre-funding and relatively high volume of donations, may drive earnings in the
second half of 2017.

In line with this, the Zacks Consensus Estimate for fourth-quarter earnings is pegged at 51 cents, reflecting a year-over-year surge of 75.9%.

Weather conditions remain a key determinant. Michigan saw a wet winter in the fourth quarter. This is expected to result in lower household expenditures on heating, which might reflect in fourth-quarter revenues.

CMS Energy Corporation Price and EPS Surprise

 

CMS Energy Corporation Price and EPS Surprise | CMS Energy Corporation Quote

 

Earnings Whispers

Our proven model does not conclusively show an earnings beat for CMS Energy this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Zacks ESP: CMS Energy has an Earnings ESP of -0.65%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CMS Energy carries a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company
is seeing negative estimate revisions.

Upcoming Peer Releases

Here are some utility companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

NiSource (NI - Free Report) has an Earnings ESP of +1.45% and a Zacks Rank #3. It is slated to report quarterly results on Feb 20. You can see the complete list of today’s Zacks #1 Rank stocks here.

CenterPoint Energy (CNP - Free Report) has an Earnings ESP of +7.62% and a Zacks Rank #3. It is scheduled to report quarterly results on Feb 22.

Consolidated Edison (ED - Free Report) has an Earnings ESP of +0.64% and a Zacks Rank #3. It is slated to report quarterly results on Feb 15.

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