Head to Head Comparison: Sempra Energy (SRE) and CMS Energy Corporation (CMS)
Sempra Energy (NYSE: SRE) and CMS Energy Corporation (NYSE:CMS) are both large-cap utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, valuation, analyst recommendations, institutional ownership, profitability and earnings.
This is a breakdown of current recommendations for Sempra Energy and CMS Energy Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|CMS Energy Corporation||0||5||5||0||2.50|
Sempra Energy presently has a consensus target price of $123.75, indicating a potential upside of 8.43%. CMS Energy Corporation has a consensus target price of $48.56, indicating a potential upside of 0.78%. Given Sempra Energy’s stronger consensus rating and higher probable upside, research analysts plainly believe Sempra Energy is more favorable than CMS Energy Corporation.
Volatility & Risk
Sempra Energy has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500. Comparatively, CMS Energy Corporation has a beta of 0.15, meaning that its stock price is 85% less volatile than the S&P 500.
Valuation and Earnings
This table compares Sempra Energy and CMS Energy Corporation’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Sempra Energy||$10.97 billion||2.61||$3.71 billion||$6.75||16.91|
|CMS Energy Corporation||$6.51 billion||2.08||$2.06 billion||$1.99||24.21|
Sempra Energy has higher revenue and earnings than CMS Energy Corporation. Sempra Energy 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.
Insider & Institutional Ownership
80.6% of Sempra Energy shares are held by institutional investors. Comparatively, 87.3% of CMS Energy Corporation shares are held by institutional investors. 0.2% of Sempra Energy shares are held by insiders. Comparatively, 0.7% of CMS Energy Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares Sempra Energy 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%|
Sempra Energy pays an annual dividend of $3.29 per share and has a dividend yield of 2.9%. CMS Energy Corporation pays an annual dividend of $1.33 per share and has a dividend yield of 2.8%. Sempra Energy pays out 48.7% of its earnings in the form of a dividend. CMS Energy Corporation pays out 66.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sempra Energy has increased its dividend for 5 consecutive years and CMS Energy Corporation has increased its dividend for 6 consecutive years. Sempra Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.
Sempra Energy beats CMS Energy Corporation on 11 of the 16 factors compared between the two stocks.
Sempra Energy Company Profile
Sempra Energy is a holding company. The Company’s principal operating units are Sempra Utilities, which includes its San Diego Gas & Electric Company (SDG&E), Southern California Gas Company (SoCalGas) and Sempra South American Utilities segments, and Sempra Infrastructure, which includes its Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream segments. As of December 31, 2016, SDG&E’s service area covered 4,100 square miles. Sempra South American Utilities operates Chilquinta Energia, which serves customers in the region of Valparaiso in central Chile. As of December 31, 2016, SoCalGas had natural gas franchises with the 12 counties and the 223 cities in its service territory. Sempra LNG & Midstream owns land in Simpson County, Mississippi Hub. Sempra LNG & Midstream owns land in Port Arthur, Texas. Sempra Renewables has operations, investments or development projects in the various United States markets.
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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