Intrinsic value of CMS Energy - CMS

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$45.47

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$45.47

 
Intrinsic value

$42.02

 
Up/down potential

-8%

 
Rating

hold

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CMS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -0.88
  8.70
  8.33
  8.00
  7.70
  7.43
  7.18
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.40
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
Revenue, $m
  6,064
  6,956
  7,535
  8,138
  8,764
  9,415
  10,092
  10,795
  11,525
  12,285
  13,075
  13,898
  14,754
  15,646
  16,576
  17,545
  18,555
  19,610
  20,712
  21,863
  23,065
  24,322
  25,637
  27,012
  28,451
  29,958
  31,535
  33,187
  34,918
  36,731
  38,632
Variable operating expenses, $m
 
  5,704
  6,179
  6,673
  7,187
  7,720
  8,275
  8,851
  9,451
  10,074
  10,722
  11,396
  12,098
  12,830
  13,592
  14,387
  15,215
  16,081
  16,984
  17,927
  18,913
  19,944
  21,022
  22,150
  23,330
  24,565
  25,859
  27,213
  28,633
  30,120
  31,678
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  5,102
  5,704
  6,179
  6,673
  7,187
  7,720
  8,275
  8,851
  9,451
  10,074
  10,722
  11,396
  12,098
  12,830
  13,592
  14,387
  15,215
  16,081
  16,984
  17,927
  18,913
  19,944
  21,022
  22,150
  23,330
  24,565
  25,859
  27,213
  28,633
  30,120
  31,678
Operating income, $m
  1,297
  1,252
  1,356
  1,465
  1,578
  1,695
  1,816
  1,943
  2,075
  2,211
  2,354
  2,502
  2,656
  2,816
  2,984
  3,158
  3,340
  3,530
  3,728
  3,935
  4,152
  4,378
  4,615
  4,862
  5,121
  5,392
  5,676
  5,974
  6,285
  6,612
  6,954
EBITDA, $m
  2,108
  1,565
  1,695
  1,831
  1,972
  2,118
  2,271
  2,429
  2,593
  2,764
  2,942
  3,127
  3,320
  3,520
  3,729
  3,948
  4,175
  4,412
  4,660
  4,919
  5,190
  5,472
  5,768
  6,078
  6,401
  6,740
  7,095
  7,467
  7,857
  8,265
  8,692
Interest expense (income), $m
  427
  431
  497
  565
  636
  710
  787
  867
  950
  1,036
  1,125
  1,219
  1,315
  1,416
  1,522
  1,631
  1,745
  1,864
  1,989
  2,119
  2,254
  2,396
  2,544
  2,699
  2,861
  3,031
  3,208
  3,394
  3,589
  3,793
  4,007
Earnings before tax, $m
  826
  821
  859
  899
  941
  984
  1,029
  1,076
  1,125
  1,176
  1,228
  1,283
  1,340
  1,400
  1,462
  1,527
  1,595
  1,665
  1,739
  1,817
  1,897
  1,982
  2,070
  2,163
  2,260
  2,361
  2,468
  2,579
  2,696
  2,819
  2,947
Tax expense, $m
  273
  222
  232
  243
  254
  266
  278
  291
  304
  317
  332
  346
  362
  378
  395
  412
  431
  450
  470
  490
  512
  535
  559
  584
  610
  638
  666
  696
  728
  761
  796
Net income, $m
  551
  599
  627
  657
  687
  719
  751
  786
  821
  858
  897
  937
  978
  1,022
  1,067
  1,115
  1,164
  1,216
  1,270
  1,326
  1,385
  1,447
  1,511
  1,579
  1,650
  1,724
  1,802
  1,883
  1,968
  2,058
  2,151

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  235
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  21,622
  23,263
  25,201
  27,216
  29,311
  31,488
  33,751
  36,102
  38,546
  41,087
  43,731
  46,481
  49,345
  52,328
  55,437
  58,678
  62,058
  65,587
  69,271
  73,119
  77,141
  81,345
  85,741
  90,341
  95,154
  100,192
  105,468
  110,994
  116,782
  122,848
  129,204
Adjusted assets (=assets-cash), $m
  21,387
  23,263
  25,201
  27,216
  29,311
  31,488
  33,751
  36,102
  38,546
  41,087
  43,731
  46,481
  49,345
  52,328
  55,437
  58,678
  62,058
  65,587
  69,271
  73,119
  77,141
  81,345
  85,741
  90,341
  95,154
  100,192
  105,468
  110,994
  116,782
  122,848
  129,204
Revenue / Adjusted assets
  0.284
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
  0.299
Average production assets, $m
  1,439
  1,565
  1,695
  1,831
  1,972
  2,118
  2,271
  2,429
  2,593
  2,764
  2,942
  3,127
  3,320
  3,520
  3,729
  3,948
  4,175
  4,412
  4,660
  4,919
  5,190
  5,472
  5,768
  6,078
  6,401
  6,740
  7,095
  7,467
  7,857
  8,265
  8,692
Working capital, $m
  -375
  730
  791
  854
  920
  989
  1,060
  1,133
  1,210
  1,290
  1,373
  1,459
  1,549
  1,643
  1,740
  1,842
  1,948
  2,059
  2,175
  2,296
  2,422
  2,554
  2,692
  2,836
  2,987
  3,146
  3,311
  3,485
  3,666
  3,857
  4,056
Total debt, $m
  10,034
  11,299
  12,851
  14,465
  16,143
  17,887
  19,699
  21,583
  23,540
  25,576
  27,693
  29,897
  32,190
  34,580
  37,070
  39,666
  42,374
  45,200
  48,151
  51,233
  54,455
  57,822
  61,344
  65,028
  68,883
  72,919
  77,145
  81,571
  86,208
  91,066
  96,157
Total liabilities, $m
  17,369
  18,634
  20,186
  21,800
  23,478
  25,222
  27,034
  28,918
  30,875
  32,911
  35,028
  37,232
  39,525
  41,915
  44,405
  47,001
  49,709
  52,535
  55,486
  58,568
  61,790
  65,157
  68,679
  72,363
  76,218
  80,254
  84,480
  88,906
  93,543
  98,401
  103,492
Total equity, $m
  4,253
  4,629
  5,015
  5,416
  5,833
  6,266
  6,716
  7,184
  7,671
  8,176
  8,702
  9,250
  9,820
  10,413
  11,032
  11,677
  12,350
  13,052
  13,785
  14,551
  15,351
  16,188
  17,062
  17,978
  18,936
  19,938
  20,988
  22,088
  23,240
  24,447
  25,712
Total liabilities and equity, $m
  21,622
  23,263
  25,201
  27,216
  29,311
  31,488
  33,750
  36,102
  38,546
  41,087
  43,730
  46,482
  49,345
  52,328
  55,437
  58,678
  62,059
  65,587
  69,271
  73,119
  77,141
  81,345
  85,741
  90,341
  95,154
  100,192
  105,468
  110,994
  116,783
  122,848
  129,204
Debt-to-equity ratio
  2.359
  2.440
  2.560
  2.670
  2.770
  2.850
  2.930
  3.000
  3.070
  3.130
  3.180
  3.230
  3.280
  3.320
  3.360
  3.400
  3.430
  3.460
  3.490
  3.520
  3.550
  3.570
  3.600
  3.620
  3.640
  3.660
  3.680
  3.690
  3.710
  3.730
  3.740
Adjusted equity ratio
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199
  0.199

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  551
  599
  627
  657
  687
  719
  751
  786
  821
  858
  897
  937
  978
  1,022
  1,067
  1,115
  1,164
  1,216
  1,270
  1,326
  1,385
  1,447
  1,511
  1,579
  1,650
  1,724
  1,802
  1,883
  1,968
  2,058
  2,151
Depreciation, amort., depletion, $m
  811
  313
  339
  366
  394
  424
  454
  486
  519
  553
  588
  625
  664
  704
  746
  790
  835
  882
  932
  984
  1,038
  1,094
  1,154
  1,216
  1,280
  1,348
  1,419
  1,493
  1,571
  1,653
  1,738
Funds from operations, $m
  1,636
  912
  966
  1,023
  1,081
  1,142
  1,206
  1,271
  1,340
  1,411
  1,485
  1,562
  1,642
  1,726
  1,813
  1,904
  1,999
  2,098
  2,202
  2,310
  2,423
  2,541
  2,665
  2,795
  2,930
  3,072
  3,221
  3,376
  3,539
  3,710
  3,890
Change in working capital, $m
  7
  58
  61
  63
  66
  68
  71
  74
  77
  80
  83
  86
  90
  94
  98
  102
  106
  111
  116
  121
  126
  132
  138
  144
  151
  158
  166
  173
  182
  190
  200
Cash from operations, $m
  1,629
  784
  905
  959
  1,016
  1,074
  1,135
  1,198
  1,263
  1,331
  1,402
  1,476
  1,552
  1,632
  1,716
  1,802
  1,893
  1,987
  2,086
  2,189
  2,297
  2,409
  2,527
  2,650
  2,779
  2,914
  3,055
  3,203
  3,358
  3,520
  3,690
Maintenance CAPEX, $m
  0
  -288
  -313
  -339
  -366
  -394
  -424
  -454
  -486
  -519
  -553
  -588
  -625
  -664
  -704
  -746
  -790
  -835
  -882
  -932
  -984
  -1,038
  -1,094
  -1,154
  -1,216
  -1,280
  -1,348
  -1,419
  -1,493
  -1,571
  -1,653
New CAPEX, $m
  -1,672
  -126
  -130
  -136
  -141
  -146
  -152
  -158
  -164
  -171
  -178
  -185
  -193
  -201
  -209
  -218
  -227
  -237
  -248
  -259
  -271
  -283
  -296
  -309
  -324
  -339
  -355
  -372
  -389
  -408
  -428
Cash from investing activities, $m
  -1,915
  -414
  -443
  -475
  -507
  -540
  -576
  -612
  -650
  -690
  -731
  -773
  -818
  -865
  -913
  -964
  -1,017
  -1,072
  -1,130
  -1,191
  -1,255
  -1,321
  -1,390
  -1,463
  -1,540
  -1,619
  -1,703
  -1,791
  -1,882
  -1,979
  -2,081
Free cash flow, $m
  -286
  370
  462
  485
  508
  533
  559
  585
  613
  642
  671
  702
  734
  768
  802
  838
  876
  915
  956
  998
  1,042
  1,089
  1,137
  1,187
  1,240
  1,295
  1,352
  1,412
  1,475
  1,541
  1,610
Issuance/(repayment) of debt, $m
  548
  1,500
  1,552
  1,614
  1,678
  1,744
  1,812
  1,883
  1,958
  2,036
  2,117
  2,203
  2,294
  2,389
  2,490
  2,596
  2,708
  2,826
  2,951
  3,082
  3,221
  3,367
  3,522
  3,684
  3,855
  4,036
  4,226
  4,426
  4,637
  4,858
  5,092
Issuance/(repurchase) of shares, $m
  72
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  602
  1,500
  1,552
  1,614
  1,678
  1,744
  1,812
  1,883
  1,958
  2,036
  2,117
  2,203
  2,294
  2,389
  2,490
  2,596
  2,708
  2,826
  2,951
  3,082
  3,221
  3,367
  3,522
  3,684
  3,855
  4,036
  4,226
  4,426
  4,637
  4,858
  5,092
Total cash flow (excl. dividends), $m
  316
  1,870
  2,014
  2,099
  2,186
  2,277
  2,371
  2,469
  2,571
  2,677
  2,789
  2,906
  3,028
  3,157
  3,292
  3,435
  3,584
  3,741
  3,907
  4,081
  4,264
  4,456
  4,658
  4,871
  5,095
  5,330
  5,578
  5,838
  6,111
  6,399
  6,701
Retained Cash Flow (-), $m
  -315
  -376
  -386
  -401
  -417
  -433
  -450
  -468
  -486
  -506
  -526
  -547
  -570
  -594
  -619
  -645
  -673
  -702
  -733
  -766
  -800
  -837
  -875
  -915
  -958
  -1,003
  -1,050
  -1,100
  -1,152
  -1,207
  -1,265
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,493
  1,629
  1,698
  1,770
  1,844
  1,921
  2,001
  2,084
  2,171
  2,263
  2,358
  2,458
  2,563
  2,674
  2,790
  2,911
  3,039
  3,174
  3,315
  3,463
  3,619
  3,783
  3,956
  4,137
  4,328
  4,528
  4,738
  4,960
  5,192
  5,436
Discount rate, %
 
  10.00
  10.50
  11.03
  11.58
  12.16
  12.76
  13.40
  14.07
  14.77
  15.51
  16.29
  17.10
  17.96
  18.86
  19.80
  20.79
  21.83
  22.92
  24.07
  25.27
  26.53
  27.86
  29.25
  30.72
  32.25
  33.86
  35.56
  37.33
  39.20
  41.16
PV of cash for distribution, $m
 
  1,358
  1,334
  1,241
  1,142
  1,039
  934
  830
  727
  628
  535
  448
  370
  299
  238
  186
  142
  106
  77
  55
  38
  26
  17
  11
  7
  4
  2
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

CMS Energy Corporation operates as an energy company primarily in Michigan. It operates through three segments: Electric Utility, Gas Utility, and Enterprises. The Electric Utility segment engages in the generation, purchase, transmission, distribution, and sale of electricity. It generates electricity through fossil-fuel-fired plants, as well as renewable energy and nuclear sources. This segment’s transmission and distribution system includes 214 miles of transmission overhead lines; 188 miles of high-voltage distribution overhead lines; 4 miles of high-voltage distribution underground lines; 4,430 miles of high-voltage distribution overhead lines; 19 miles of high-voltage distribution underground lines; 56,067 miles of electric distribution overhead lines; 10,532 miles of underground distribution lines; and substations. The Gas Utility segment is involved in the purchase, transmission, storage, distribution, and sale of natural gas. This segment’s gas transmission, storage, and distribution system comprises 1,670 miles of transmission lines; 15 gas storage fields; 27,920 miles of distribution mains; and 8 compressor stations. The Enterprises segment engages in the independent power production and marketing activities; and development of renewable generation. As of December 31, 2016, this segment had ownership interests in independent power plants totaling 1,177 megawatts. The company also operates an industrial bank providing unsecured consumer installment loans for financing home improvements. It serves 1.8 million electric customers and 1.8 million gas customers, including residential, commercial, and diversified industrial customers in Michigan’s Lower Peninsula. CMS Energy Corporation was founded in 1987 and is headquartered in Jackson, Michigan.

FINANCIAL RATIOS  of  CMS Energy (CMS)

Valuation Ratios
P/E Ratio 23
Price to Sales 2
Price to Book 3
Price to Tangible Book
Price to Cash Flow 7.8
Price to Free Cash Flow -295.2
Growth Rates
Sales Growth Rate -0.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 6.9%
Cap. Spend. - 3 Yr. Gr. Rate 3.9%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 205.7%
Total Debt to Equity 235.9%
Interest Coverage 3
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 4%
Ret/ On T. Cap. - 3 Yr. Avg. 4%
Return On Equity 13.5%
Return On Equity - 3 Yr. Avg. 13.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 32.3%
EBITDA Margin - 3 Yr. Avg. 29.1%
Operating Margin 20.3%
Oper. Margin - 3 Yr. Avg. 18.1%
Pre-Tax Margin 12.9%
Pre-Tax Margin - 3 Yr. Avg. 11.8%
Net Profit Margin 8.6%
Net Profit Margin - 3 Yr. Avg. 7.8%
Effective Tax Rate 33.1%
Eff/ Tax Rate - 3 Yr. Avg. 33.8%
Payout Ratio 63%

CMS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CMS stock intrinsic value calculation we used $6399 million for the last fiscal year's total revenue generated by CMS Energy. The default revenue input number comes from 2016 income statement of CMS Energy. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CMS stock valuation model: a) initial revenue growth rate of 8.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 10%, whose default value for CMS is calculated based on our internal credit rating of CMS Energy, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of CMS Energy.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CMS stock the variable cost ratio is equal to 82%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for CMS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.4% for CMS Energy.

Corporate tax rate of 27% is the nominal tax rate for CMS Energy. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CMS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CMS are equal to 22.5%.

Life of production assets of 1.8 years is the average useful life of capital assets used in CMS Energy operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CMS is equal to 10.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4253 million for CMS Energy - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 280.733 million for CMS Energy is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of CMS Energy at the current share price and the inputted number of shares is $12.8 billion.


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COMPANY NEWS

▶ CMS Energy To Announce First-Quarter Results May 1   [Apr-19-17 04:30PM  PR Newswire]
▶ ETFs with exposure to CMS Energy Corp. : April 7, 2017   [Apr-07-17 04:12PM  Capital Cube]
▶ Consumers Energy Shares Space Heater Safety Tips   [Jan-27-17 06:00AM  PR Newswire]
▶ Is CMS Energy Corporation (CMS) a Good Stock to Buy?   [Dec-14-16 11:05AM  at Insider Monkey]
▶ [$$] Entergy Plans to Close Michigan Nuclear Plant in 2018   [10:02AM  at The Wall Street Journal]
Stock chart of CMS Financial statements of CMS
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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