CMS Energy Beats on Earnings, Revs - Analyst Blog

CMS Energy Corporation CMS posted first-quarter 2014 earnings per share of 75 cents both on an adjusted and GAAP basis. Quarterly figure surpassed the Zacks Consensus Estimate of 64 cents by 17.2% and increased 41.5% on a year-over-year basis.

The outperformance was primarily driven by higher electricity sales and natural gas deliveries as result of an extremely cold weather, and the implementation of its business plan.

Operational Performance

In the quarter under review, CMS Energy's operating revenues came in at $2,523 million, beating the Zacks Consensus Estimate of $2,167 million by 16.4%. On a year-over-year basis, top line edged up 27.5% from $1,979 million.

The company's operating expenses were $2,115 million in first-quarter, up 28.2% year over year.

Despite a surge in operating expenses, CMS Energy's operating income jumped 24% year over year to $408 million, primarily on the back of higher revenues.

In the quarter, interest charges increased 3.1% year over year to $101 million due to higher debt level.

Financial Position

CMS Energy had cash and cash equivalents of $758 million as of Mar 31, 2014, up from $172 million as of Dec 31, 2013.

As of Mar 31, 2014, total debt, capital leases and financing obligations rose to $7,588 million from $7,227 million as of Dec 31, 2013.

During the first three months of 2014, the company's cash provided by operating activities was $611 million versus $725 million in the year-ago comparable period.

Guidance

CMS Energy reiterated its earnings forecast for 2014 to $1.74 - $1.78 per share. The guidance is consistent with the company's long-term goal of 5% to 7% annual earnings per share growth.

Business Highlights

In Michigan, CMS Energy intends to acquire a 540 megawatt clean-burning natural gas power plant. The company plans to complete the transaction in 2015.

The company continued with the construction of its 24-mile Southwest Michigan pipeline project. This venture will enable the company to provide reliable services to its natural gas customers.

Peer Comparison

Entergy Corp. ETR reported first-quarter 2014 operational earnings of $2.29 per share, beating the Zacks Consensus Estimate by 8.5%. Quarterly earnings also increased 143.6% year over year.

Zacks Rank

CMS Energy currently has a Zacks Rank #2 (Buy). Other stocks in the industry looking equally good are NRG Energy, Inc. NRG and Ameren Corporation AEE. While NRG Energy carries a Zacks Rank #1 (Strong Buy), Ameren holds a Zacks Rank #2 (Buy).