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CMS Energy Rides on Investments and Renewable Expansion
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CMS Energy Corporation (CMS - Free Report) is making systematic investments to enhance its operations and gain from delivering high-quality services to its consumers. The company is expanding its renewable power portfolio while eliminating coal-generating units.
However, this Zacks Rank #3 (Hold) company is exposed to unfavorable costs associated with the shutdown of solid waste disposal facilities for coal ash and fluctuating commodity prices, which are headwinds.
Factors Acting in Favor of CMS
CMS Energy is investing heavily in infrastructure renovations, infrastructure replacements and clean power production to increase customer satisfaction and improve the resiliency of its operation. The company plans to make capital expenditures worth $17 billion in the 2024-2028 period.
CMS Energy intends to install roughly 8,000 MW of solar production by 2040. It also plans to deploy battery storage, beginning in 2024, with 75 MW of energy storage by 2027 and an additional 475 MW by 2040. The company has also announced plans to construct an 85-megawatt solar array at the former D.E. Karn coal-generating plant. The plant is expected to be operational by 2026. Such initiatives should enable CMS Energy to diversify its renewable energy portfolio.
Similar to other utility service providers, CMS Energy is putting emphasis on strengthening the resilience and dependability of grids in order to reduce customer outages, safeguard their infrastructure from extreme weather and facilitate an orderly transition of the industry toward greater adoption of clean energy. All of these factors will lower operating costs. A reduction in operational expenses and increased availability of power in its systems will boost the company’s revenues.
Factors That Can Adversely Impact CMS Stock
As environmental rules governing carbon emissions during electricity generation become increasingly rigorous, there is still cause for concern, despite the fact that the company's power-generating facilities have installed several pollution-control measures. Nearly 20% of its overall generation came from coal as of Dec. 31, 2023. CMS incurs considerable expenditures associated with the development, operation and closure of solid waste disposal facilities for coal ash. In order to comply with these laws, consumers anticipate that the company will need to spend $238 million between 2024 and 2028.
CMS Energy does not always protect all of its activities against fluctuations in commodity prices. Variations in commodity prices might negatively impact CMS Energy's operational performance if it has unhedged positions.
CMS Stock Price Movement
In the past three months, shares of CMS have risen 18.8% compared with the industry’s growth of 12.8%.
DTE Energy’s long-term (three to five years) earnings growth rate is 8.1%. The company delivered an average earnings surprise of 0.77% in the trailing four quarters.
IDACORP delivered an average earnings surprise of 10.35% in the trailing four quarters. The Zacks Consensus Estimate for IDA’s 2024 sales indicates an increase of 3.8% from the prior-year reported figure.
Entergy’s long-term earnings growth rate is 7.3%. The Zacks Consensus Estimate for ETR’s 2024 sales calls for an improvement of 0.8% from the prior-year reported figure.
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CMS Energy Rides on Investments and Renewable Expansion
CMS Energy Corporation (CMS - Free Report) is making systematic investments to enhance its operations and gain from delivering high-quality services to its consumers. The company is expanding its renewable power portfolio while eliminating coal-generating units.
However, this Zacks Rank #3 (Hold) company is exposed to unfavorable costs associated with the shutdown of solid waste disposal facilities for coal ash and fluctuating commodity prices, which are headwinds.
Factors Acting in Favor of CMS
CMS Energy is investing heavily in infrastructure renovations, infrastructure replacements and clean power production to increase customer satisfaction and improve the resiliency of its operation. The company plans to make capital expenditures worth $17 billion in the 2024-2028 period.
CMS Energy intends to install roughly 8,000 MW of solar production by 2040. It also plans to deploy battery storage, beginning in 2024, with 75 MW of energy storage by 2027 and an additional 475 MW by 2040. The company has also announced plans to construct an 85-megawatt solar array at the former D.E. Karn coal-generating plant. The plant is expected to be operational by 2026. Such initiatives should enable CMS Energy to diversify its renewable energy portfolio.
Similar to other utility service providers, CMS Energy is putting emphasis on strengthening the resilience and dependability of grids in order to reduce customer outages, safeguard their infrastructure from extreme weather and facilitate an orderly transition of the industry toward greater adoption of clean energy. All of these factors will lower operating costs. A reduction in operational expenses and increased availability of power in its systems will boost the company’s revenues.
Factors That Can Adversely Impact CMS Stock
As environmental rules governing carbon emissions during electricity generation become increasingly rigorous, there is still cause for concern, despite the fact that the company's power-generating facilities have installed several pollution-control measures. Nearly 20% of its overall generation came from coal as of Dec. 31, 2023. CMS incurs considerable expenditures associated with the development, operation and closure of solid waste disposal facilities for coal ash. In order to comply with these laws, consumers anticipate that the company will need to spend $238 million between 2024 and 2028.
CMS Energy does not always protect all of its activities against fluctuations in commodity prices. Variations in commodity prices might negatively impact CMS Energy's operational performance if it has unhedged positions.
CMS Stock Price Movement
In the past three months, shares of CMS have risen 18.8% compared with the industry’s growth of 12.8%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the same industry are DTE Energy Corp. (DTE - Free Report) , IDACORP, Inc. (IDA - Free Report) and Entergy Corporation (ETR - 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.
DTE Energy’s long-term (three to five years) earnings growth rate is 8.1%. The company delivered an average earnings surprise of 0.77% in the trailing four quarters.
IDACORP delivered an average earnings surprise of 10.35% in the trailing four quarters. The Zacks Consensus Estimate for IDA’s 2024 sales indicates an increase of 3.8% from the prior-year reported figure.
Entergy’s long-term earnings growth rate is 7.3%. The Zacks Consensus Estimate for ETR’s 2024 sales calls for an improvement of 0.8% from the prior-year reported figure.