Cms Energy Stock Analysis
Autor: samia.rouichi • November 8, 2015 • Research Paper • 4,147 Words (17 Pages) • 967 Views
CMS Energy Corp
Stock Analysis
Security Analysis
Prof. Simon
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Date of Submission 12/2/13 | Title of Assignment Stock Analysis Research Project |
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Recommendation: Buy CMS stock
After a deep analysis, it has been identified that CMS energy has many strengths that definitely makes it a buy. CMS energy has a good level of cash flow from operation. The price of the stock of the company also has increased this last year. And finally, their return of equity is quite important. All of these strengths outweigh some negative aspects such as the fact that the net income of CMS knew a sub par growth. Both DDM and DCF Model show the stock is under valued. The Dividend Discount Model states that the stock should have a theoretical price of $28.64, while its closing price Friday was $26.54. Ratios demonstrate that CMS is trading below its fundamentals, and therefore is valued as a Value Stock. Net operating cash flow increased by 355.55% to $23.00 million compared to the same quarter last year. CMS ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of 24.26%. The return on equity has improved slightly when compared to the same quarter of the previous year. This can be construed as a modest strength in the organization. “Compared to other companies in the Multi-Utilities industry and the overall market on the basis of return on equity, CMS ENERGY CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.” Nevertheless, comparing to last year, the stock is up. Unless broad bear market conditions prevail, there is more of an upside potential for the stock of CMS Energy Corp even if it has already been rising over the past year. The company despite the drop in its revenues by 4.1% outperformed the industry by 5.4%. The EPS declined by 16.4% last year but there is an expected inverse tendency for the upcoming year. “During the past fiscal year, CMS ENERGY CORP reported lower earnings of $1.39 versus $1.57 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus $1.39)”(CMS rating report from The Street financial magazine).
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