Head to Head Contrast: Edison International (NYSE:EIX) & CMS Energy (NYSE:CMS)

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

Volatility and Risk

CMS Energy has a beta of 0.43, meaning that its share price is 57% less volatile than the S&P 500. Comparatively, Edison International has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500.

Profitability

This table compares CMS Energy and Edison International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CMS Energy	12.54%	12.09%	2.87%
Edison International	24.34%	14.87%	2.91%

Institutional and Insider Ownership

93.6% of CMS Energy shares are owned by institutional investors. Comparatively, 89.0% of Edison International shares are owned by institutional investors. 0.4% of CMS Energy shares are owned by company insiders. Comparatively, 1.2% of Edison International shares are owned 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.

Dividends

CMS Energy pays an annual dividend of $2.28 per share and has a dividend yield of 2.9%. Edison International pays an annual dividend of $3.51 per share and has a dividend yield of 4.8%. CMS Energy pays out 64.6% of its earnings in the form of a dividend. Edison International pays out 30.4% 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. CMS Energy has raised its dividend for 3 consecutive years and Edison International has raised its dividend for 23 consecutive years. Edison International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares CMS Energy and Edison International”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CMS Energy	$8.54 billion	2.83	$1.07 billion	$3.53	22.25
Edison International	$19.32 billion	1.46	$4.70 billion	$11.56	6.36

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for CMS Energy and Edison International, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CMS Energy	0	6	7	0	2.54
Edison International	3	6	3	0	2.00

CMS Energy presently has a consensus target price of $79.38, suggesting a potential upside of 1.05%. Edison International has a consensus target price of $69.44, suggesting a potential downside of 5.51%. Given CMS Energy’s stronger consensus rating and higher probable upside, equities research analysts clearly believe CMS Energy is more favorable than Edison International.

Summary

Edison International beats CMS Energy on 11 of the 17 factors compared between the two stocks.

About CMS Energy

CMS Energy Corporation operates as an energy company primarily in Michigan. The company operates through three segments: Electric Utility; Gas Utility; and Enterprises. The Electric Utility segment is involved in the generation, purchase, transmission, distribution, and sale of electricity. This segment generates electricity through coal, wind, gas, renewable energy, oil, and nuclear sources. Its distribution system comprises 208 miles of high-voltage distribution overhead lines; 4 miles of high-voltage distribution underground lines; 4,428 miles of high-voltage distribution overhead lines; 19 miles of high-voltage distribution underground lines; 82,474 miles of electric distribution overhead lines; 9,395 miles of underground distribution lines; 1,093 substations; and 3 battery facilities. The Gas Utility segment engages in the purchase, transmission, storage, distribution, and sale of natural gas, which includes 2,392 miles of transmission lines; 15 gas storage fields; 28,065 miles of distribution mains; and 8 compressor stations. The Enterprises segment is involved in the independent power production and marketing, including the development and operation of renewable generation. It serves 1.9 million electric and 1.8 million gas customers, including residential, commercial, and diversified industrial customers. The company was incorporated in 1987 and is headquartered in Jackson, Michigan.

About Edison International

Edison International, through its subsidiaries, engages in the generation and distribution of electric power. The company supplies and delivers electricity to approximately 50,000 square mile area of southern California to residential, commercial, industrial, public authorities, agricultural, and other sectors. Its transmission facilities consist of lines ranging from 55 kV to 500 kV and approximately 80 transmission substations; distribution system consists of approximately 38,000 circuit-miles of overhead lines; approximately 31,000 circuit-miles of underground lines; and 730 distribution substations. The company was founded in 1886 and is based in Rosemead, California.