Financial Analysis: Avangrid (AGR) and CMS Energy Corporation (NYSE:CMS)
Avangrid (NYSE: AGR) and CMS Energy Corporation (NYSE:CMS) are both large-cap utilities companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, profitabiliy, dividends, analyst recommendations, valuation, institutional ownership and risk.
This table compares Avangrid and CMS Energy Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|CMS Energy Corporation||8.52%||12.98%||2.64%|
Valuation and Earnings
This table compares Avangrid and CMS Energy Corporation’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Avangrid||$6.00 billion||2.42||$1.94 billion||$2.18||21.53|
|CMS Energy Corporation||$6.51 billion||2.05||$2.06 billion||$1.99||23.83|
CMS Energy Corporation has higher revenue and earnings than Avangrid. Avangrid is trading at a lower price-to-earnings ratio than CMS Energy Corporation, indicating that it is currently the more affordable of the two stocks.
Avangrid pays an annual dividend of $1.73 per share and has a dividend yield of 3.7%. CMS Energy Corporation pays an annual dividend of $1.33 per share and has a dividend yield of 2.8%. Avangrid pays out 79.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CMS Energy Corporation pays out 66.8% of its earnings in the form of a dividend. Avangrid has increased its dividend for 5 consecutive years. Avangrid is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Avangrid has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500. Comparatively, CMS Energy Corporation has a beta of 0.16, suggesting that its share price is 84% less volatile than the S&P 500.
This is a summary of recent ratings and price targets for Avangrid and CMS Energy Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|CMS Energy Corporation||0||4||4||0||2.50|
Avangrid currently has a consensus target price of $44.88, suggesting a potential downside of 4.38%. CMS Energy Corporation has a consensus target price of $47.43, suggesting a potential upside of 0.02%. Given CMS Energy Corporation’s higher possible upside, analysts clearly believe CMS Energy Corporation is more favorable than Avangrid.
Institutional & Insider Ownership
13.5% of Avangrid shares are owned by institutional investors. Comparatively, 86.5% of CMS Energy Corporation shares are owned by institutional investors. 0.3% of Avangrid shares are owned by company insiders. Comparatively, 0.7% of CMS Energy Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
CMS Energy Corporation beats Avangrid on 9 of the 16 factors compared between the two stocks.
Avangrid Company Profile
Avangrid, Inc. is an energy and utility company. The Company operates through three segments: Networks, Renewables and Gas. The Networks segment includes all the energy transmission and distribution activities, and any other regulated activity originating in New York and Maine, and regulated electric distribution, electric transmission and gas distribution activities originating in Connecticut and Massachusetts. The Renewables segment owns, develops, constructs and/or operates electricity generation, including renewable and thermal generators, and associated transmission facilities. The Renewables segment includes activities relating to renewable energy, mainly wind energy generation and trading related with such activities. The Gas segment operates a natural gas storage and natural gas trading business through its subsidiaries, Enstor, Inc. and Enstor Energy Services, LLC.
CMS Energy Corporation Company Profile
CMS Energy Corporation is an energy company operating primarily in Michigan. The Company operates through three segments: electric utility, which consists of regulated activities associated with the generation, transmission and distribution of electricity in Michigan; gas utility, which consists of regulated activities associated with the transportation, storage and distribution of natural gas in Michigan, and enterprises, which consists of various subsidiaries engaging primarily in domestic independent power production. The Company is the parent holding company of various subsidiaries, including Consumers Energy Company (Consumers), an electric and gas utility company, and CMS Enterprises Company (CMS Enterprises), a domestic independent power producer. Consumers serves individuals and businesses operating in the alternative energy, automotive, chemical, metal, and food products industries, as well as a group of other industries.
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