Financial Analysis: Terna Rete Elettrica Nazionale (OTCMKTS:TEZNY) & CMS Energy (NYSE:CMS)

CMS Energy (NYSE:CMS) and Terna Rete Elettrica Nazionale (OTCMKTS:TEZNY) are both large-cap utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, profitability, risk, institutional ownership, dividends, valuation and earnings.

Analyst Recommendations

This is a breakdown of current ratings and price targets for CMS Energy and Terna Rete Elettrica Nazionale, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CMS Energy	0	5	7	1	2.69
Terna Rete Elettrica Nazionale	1	1	0	0	1.50

CMS Energy presently has a consensus target price of $81.33, suggesting a potential upside of 12.67%. Given CMS Energy’s stronger consensus rating and higher probable upside, equities analysts clearly believe CMS Energy is more favorable than Terna Rete Elettrica Nazionale.

Volatility & Risk

CMS Energy has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500. Comparatively, Terna Rete Elettrica Nazionale has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500.

Profitability

This table compares CMS Energy and Terna Rete Elettrica Nazionale’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CMS Energy	12.55%	12.17%	2.91%
Terna Rete Elettrica Nazionale	N/A	N/A	N/A

Dividends

CMS Energy pays an annual dividend of $2.28 per share and has a dividend yield of 3.2%. Terna Rete Elettrica Nazionale pays an annual dividend of $0.47 per share and has a dividend yield of 1.4%. CMS Energy pays out 63.0% of its earnings in the form of a dividend. CMS Energy has raised its dividend for 3 consecutive years. CMS Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares CMS Energy and Terna Rete Elettrica Nazionale”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CMS Energy	$8.54 billion	2.61	$1.07 billion	$3.62	19.94
Terna Rete Elettrica Nazionale	$3.98 billion	5.67	$1.15 billion	N/A	N/A

Terna Rete Elettrica Nazionale has lower revenue, but higher earnings than CMS Energy.

Institutional & Insider Ownership

93.6% of CMS Energy shares are held by institutional investors. 0.5% of CMS Energy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

CMS Energy beats Terna Rete Elettrica Nazionale on 12 of the 16 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 Terna Rete Elettrica Nazionale

Terna S.p.A., together with its subsidiaries, provides electricity transmission and dispatching services in Italy, other Euro-area countries, and internationally. It operates through Regulated, Non-Regulated, and International segments. The company is involved in the design, construction, management, development, operation, and maintenance of national transmission grid; dispatching and metering; and construction of storage systems. It also supplies transformers and cables; provides energy and connectivity services; and installs and operates interconnecting lines. In addition, the company designs, produces, commercializes, and repairs power transformers for electricity transmission and distribution grids; industrial transformers for the steel and metals industries; special transformers for convertors used in electrochemical production; produces and sells marine and terrestrial cables; develops renewable energy projects; and undertakes private interconnector projects. Terna S.p.A. was founded in 1962 and is based in Rome, Italy.