logo
  Join        Login             Stock Quote

CMS Energy: Road To Recovery

 February 07, 2013 03:23 PM
 


by Roger Conrad, editor Utility Forecaster

Nine years ago CMS Energy Corp. (CMS) stood on the brink of bankruptcy. The longtime CEO had lost the confidence of regulators, shareholders and the utility's Michigan customers.

After a scandal involving phony energy trades broke, he was forced to step down. That's when current Chairman David Joos set the company on the road to recovery.

Joos focused on slashing debt, dumping unprofitable non-utility operations and repairing long-frayed relations with regulators.

There was plenty of pain along the way, including a four-year stretch during which the company paid no dividends.

[Related -Dividend Roundup: PG, FRC, CMS, NNN, FLY, STNG]

Today CMS is an invest-to-grow story. The company again boasts an investment-grade credit rating and is reliably growing earnings and dividends.

CMS announced this month it will build a $750 million, 700-megawatt natural gas-fired power plant to enter service in 2017. That adds to five-year utility system capital spending plans of $6.5 billion to $7.3 billion already in the works.

Meanwhile, once-contentious Michigan has evolved into a model regulatory climate as a consequence of the state's 2008 energy law.

The manufacturing boom in CMS' territory has further helped relations, with industrial sales surging nearly 6 percent the past 12 months.

Return on equity is a solid 10.3 percent, and the company has structured its investment to minimize rate increases.

[Related -4 Higher-Yield Stocks Increasing Their Yield]

CMS raised its dividend by more than 14 percent in 2012.

Expected 5 percent to 7 percent annual underlying earnings growth and a low payout ratio should ensure another 8 percent to 10 percent boost this month.

Coupled with sharply reduced financial and operating risk, CMS earns a move to the Growth Portfolio Core Holdings. Buy up to my raised target of 25.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageInitial Jobless Claims Rose Unexpectedly

Claims unexpectedly rose in the latest report through last weekend to breach 300,000 for the first time read on...

article imageAll Quiet on the Record High Front

What can we glean from the media’s lack of attention to the market’s recent record read on...

article imageThe Chip Maker Short Sellers Should Be Watching

Investing in semiconductor stocks is always tricky. Industry cycles can lead to bumps in the road for the read on...

article imageChicago Fed: US Economic Growth Slowed In October

The pace of US growth slowed more than expected in October, according to this morning’s update of the read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

High Yield Momentum Stock Portfolio, May Update
More Articles on: Utilities



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.