CMS Energy CorporationCMS

Morningstar Rating

Stock Research and Analysis

by Mark Barnett

CMS Energy has been pursuing a back-to-basics strategy in recent years, selling off noncore assets and focusing on its regulated utility, Consumers Energy. Although we applaud the return to the pure-play utility, we have reservations about this company's Read more

Bulls Say

Legislation passed by the Michigan legislature will allow for a much more efficient rate structure for Michigan utilities.

CMS' back-to-basics strategy has freed the company of its nonperforming international assets, leading to a healthier balance sheet and more reliable cash flows going forward.

After some lean years, CMS' board has reinstated the dividend, increasing it 40% in the first quarter of 2009 and 20% in the first quarter of 2010.

Decoupling should ease the pain of customer conservation and reduce lag when weather is cooler than normal. Read more

Bears Say

The company's operations are almost entirely located within Michigan, a state with a poor economic outlook and little to no population growth.

We think management's 7% annual rate-base growth projection during the next five years is a bit aggressive. We project average growth of 6.0%-6.5%, but continued usage declines could clip that further.

CMS will be an annual rate case filer. We think this is a risky proposition, as regulators are likely to lean toward helping rate payers in times of economic struggle.

The company carries far too much debt at the parent level. Read more

Strategy

Management's strategy has been to divest itself of its noncore assets in its back-to-basics plan to become a pure-play regulated utility. The company will seek to improve its regulatory mechanisms while Read more

Management

CEO David Joos has been with CMS since 1983, rising through the ranks of the Consumers Energy electric utility. He served as COO from 2001 and took over the top post from interim CEO Kevin Whipple in 2004. Joos helped to lead CMS through its back-to-basics Read more

Profile

CMS Energy is an energy holding company with two principal segments, Consumers Energy and Enterprises. Consumers provides regulated natural gas and electric service to roughly Read more

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