Head-To-Head Contrast: CMS Energy (NYSE:CMS) vs. Edison International (NYSE:EIX)

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

Analyst Recommendations

This is a summary of current ratings for Edison International and CMS Energy, as provided by MarketBeat.com.

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

Edison International presently has a consensus target price of $69.44, suggesting a potential downside of 3.45%. CMS Energy has a consensus target price of $79.38, suggesting a potential upside of 2.88%. Given CMS Energy’s stronger consensus rating and higher possible upside, analysts clearly believe CMS Energy is more favorable than Edison International.

Valuation & Earnings

This table compares Edison International and CMS Energy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Edison International	$19.32 billion	1.43	$4.70 billion	$11.56	6.22
CMS Energy	$8.54 billion	2.78	$1.07 billion	$3.53	21.86

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.

Dividends

Edison International pays an annual dividend of $3.51 per share and has a dividend yield of 4.9%. CMS Energy pays an annual dividend of $2.28 per share and has a dividend yield of 3.0%. Edison International pays out 30.4% of its earnings in the form of a dividend. CMS Energy pays out 64.6% 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. Edison International has increased its dividend for 23 consecutive years and CMS Energy has increased its dividend for 3 consecutive years. Edison International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

89.0% of Edison International shares are owned by institutional investors. Comparatively, 93.6% of CMS Energy shares are owned by institutional investors. 1.2% of Edison International shares are owned by insiders. Comparatively, 0.5% of CMS Energy shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

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

Volatility and Risk

Edison International has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500. Comparatively, CMS Energy has a beta of 0.46, suggesting that its share price is 54% less volatile than the S&P 500.

Summary

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

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.

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.