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CMS Energy (CMS) is in focus after subsidiary Consumers Energy outlined over $100 million in statewide assistance for Michigan customers facing high winter heating bills, along with reaffirmed plans for infrastructure upgrades and renewable energy investments.
See our latest analysis for CMS Energy.
The recent customer support announcement comes after a steady run in the shares, with a 1-month share price return of 2.97% and a year-to-date share price return of 2.30%. The 1-year total shareholder return of 13.16% points to gradually building momentum.
If this kind of regulated utility story interests you, it can be useful to compare CMS Energy with other healthcare stocks as part of a broader defensive-income watchlist.
With CMS Energy shares up 13.16% over the past year and trading about 7% below one analyst price target, the key question is whether current fundamentals justify more upside or if the market already reflects future growth plans.
With CMS Energy last closing at $72.04 and the most followed narrative pointing to a fair value around $78.38, the stock sits modestly below that view while the company leans into grid and clean energy spending in Michigan.
The accelerating demand for electricity, driven in part by large new data center projects and strong population and business growth within Michigan, is set to sustainably boost sales growth above prior forecasts, likely resulting in stronger top-line revenue and rate base expansion.
Read the complete narrative.
Want to see what sits behind that fair value gap? The narrative leans on steady revenue expansion, firmer margins, and a future earnings multiple that assumes investors stay comfortable paying up for regulated growth. Curious which specific earnings and cash flow paths need to line up for that to hold? The full story spells out those moving parts in detail.
Result: Fair Value of $78.38 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, the story can change if Michigan regulators become less supportive of rate recovery or if data center and electrification demand falls short of current expectations.
Find out about the key risks to this CMS Energy narrative.
While the popular narrative points to an 8.1% undervaluation around $78.38 per share, our DCF model suggests something different. On that cash flow view, CMS Energy, at $72.04, sits above an estimated future cash flow value of about $67.16, which screens as overvalued rather than cheap.
That sets up a clear tension, with one approach leaning on earnings and multiples and the other on long term cash flows. The real question for you is simple: which set of assumptions about growth, returns and reinvestment feels more realistic over time?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out CMS Energy for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 881 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.
If you see the data differently or simply prefer to test your own assumptions, you can build a custom view in a few minutes with Do it your way.
A great starting point for your CMS Energy research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.
If CMS Energy is on your radar, do not stop there. Widen your watchlist with a few focused stock ideas that line up with how you like to invest.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include CMS.
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