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Analysis of CMS Energy Corporation

Analysis of CMS Energy Corporation

12 October 2022

CMS: a bet on “green” energy

 CMS Energy is a utility sector company. It serves electricity consumers in the state of Michigan. Basically, it is a retail market with a regulated flow of operations.

An important feature of the business was the transition to carbon neutrality by 2040. The state of Michigan, where the business operates, is the best fit for this, as it is distinguished by modern industry regulation. The company is gradually closing coal-fired thermal power plants. Previously, the plan assumed the shutdown of coal plants in 2039, but now it has been optimized and can be implemented by 2025. There is no vacuum in the supply of electricity: CMS launches gas-fired thermal power plants, but the main modern rate will be on renewable energy.

The CMS strategy looks as “green” as possible and in some places quite aggressive. There is a certain risk to the stability of the cash flow, but both the sale of non-core assets and the parallel introduction of alternative energy sources will contribute to reducing the load.

Advantages:

  • moderate debt burden;
  • the dividend yield is above the average for the sector;
  • a promising ESG approach;
  • stable financial indicators.

Risks:

  • the probability of a wide fall in the US stock market;
  • high inflation in the United States in 2022 and 2023;
  • lower environmental parameters than the ones of competitors.

The consensus forecast for the stock is $69-70.

On the daily chart, the MACD indicator is declining in the negative zone and signals a sale. The Stochastic oscillator is trying to recover in the negative area and is ready to form a buy signal. Current sales follow the market and have nothing to do with the company’s activities.

12 October 2022
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