CMS Energy Corporation (NYSE: CMS) and NiSource (NYSE:NI) are both mid-cap utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Analyst Ratings

This is a breakdown of recent recommendations for CMS Energy Corporation and NiSource, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CMS Energy Corporation 0 4 4 0 2.50
NiSource 0 5 7 0 2.58

CMS Energy Corporation currently has a consensus target price of $47.71, indicating a potential downside of 1.13%. NiSource has a consensus target price of $26.43, indicating a potential downside of 1.90%. Given CMS Energy Corporation’s higher possible upside, equities analysts clearly believe CMS Energy Corporation is more favorable than NiSource.

Dividends

CMS Energy Corporation pays an annual dividend of $1.33 per share and has a dividend yield of 2.8%. NiSource pays an annual dividend of $0.70 per share and has a dividend yield of 2.6%. CMS Energy Corporation pays out 66.8% of its earnings in the form of a dividend. NiSource pays out 81.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NiSource has increased its dividend for 5 consecutive years. CMS Energy Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares CMS Energy Corporation and NiSource’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CMS Energy Corporation $6.51 billion 2.09 $2.06 billion $1.99 24.25
NiSource $4.75 billion 1.85 $1.40 billion $0.86 31.33

CMS Energy Corporation has higher revenue and earnings than NiSource. CMS Energy Corporation is trading at a lower price-to-earnings ratio than NiSource, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

CMS Energy Corporation has a beta of 0.16, meaning that its share price is 84% less volatile than the S&P 500. Comparatively, NiSource has a beta of 0.37, meaning that its share price is 63% less volatile than the S&P 500.

Institutional & Insider Ownership

85.9% of CMS Energy Corporation shares are held by institutional investors. Comparatively, 82.2% of NiSource shares are held by institutional investors. 0.7% of CMS Energy Corporation shares are held by company insiders. Comparatively, 0.4% of NiSource shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares CMS Energy Corporation and NiSource’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%
NiSource -4.47% -4.27% -0.95%

Summary

CMS Energy Corporation beats NiSource on 12 of the 17 factors compared between the two stocks.

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.

NiSource Company Profile

NiSource Inc. is an energy holding company. The Company is engaged in the distribution of natural gas. The Company operates through two business segments: Gas Distribution Operations and Electric Operations. The Company’s Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. As of December 31, 2016, the Company’s Electric Operations segment provided electric services in 20 counties in the northern part of Indiana. The Company’s electric operations segment generated, transmitted and distributed electricity through the Company’s subsidiary NIPSCO to approximately 466,000 customers in 20 counties in the northern part of Indiana and engaged in wholesale and transmission transactions, as of December 31, 2016. NIPSCO owned and operated three coal-fired electric generating stations, as of December 31, 2016.

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