CMS Energy (NYSE:CMS) vs. Iren (OTCMKTS:IRDEY) Critical Analysis

CMS Energy (NYSE:CMS) and Iren (OTCMKTS:IRDEY) are both utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, dividends, analyst recommendations, valuation and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
CMS Energy	11.64%	10.76%	2.62%
Iren	N/A	N/A	N/A

Insider and Institutional Ownership

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CMS Energy	$8.81 billion	2.45	$1.07 billion	$3.33	20.68
Iren	N/A	N/A	N/A	$0.61	47.49

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

Analyst Ratings

This is a summary of current recommendations and price targets for CMS Energy and Iren, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CMS Energy	0	6	6	0	2.50
Iren	0	0	0	0	0.00

CMS Energy currently has a consensus target price of $81.83, indicating a potential upside of 18.86%. Given CMS Energy’s stronger consensus rating and higher possible upside, analysts clearly believe CMS Energy is more favorable than Iren.

Dividends

CMS Energy pays an annual dividend of $2.28 per share and has a dividend yield of 3.3%. Iren pays an annual dividend of $0.38 per share and has a dividend yield of 1.3%. CMS Energy pays out 68.5% of its earnings in the form of a dividend. Iren pays out 62.8% 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. 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.

Summary

CMS Energy beats Iren on 12 of the 14 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 Iren

Iren SpA, together with its subsidiaries, operates as a multi-utility company in Italy. It operates through Networks, Waste Management, Energy, Market, and Other Services segments. The company produces and distributes electricity primarily from hydroelectric, thermoelectric, cogeneration, and other renewables, as well as distributes natural gas. It distributes electrical energy through 7,872 kilometers of medium and low voltage networks to approximately 729,000 connected users; and natural gas through its network of approximately 8,160 kilometers of high, medium, and low-pressure pipes to approximately 738,000 customers. The company also operates integrated water cycle, which includes 20,358 kilometers of pipeline networks that serve 2.9 million residents; 11,279 kilometers of sewerage networks; and operates treatment plants. In addition, it is involved in the provision of services related to street lighting systems, traffic light systems, heating systems, and electrical and special systems; collection and disposal of waste; snow clearing services; and analysis laboratories, telecommunications, and other services. It operates 35 hydroelectric plants, 7 thermoelectric cogeneration systems, and 1 thermoelectric plant, as well as 105 photovoltaic production plants with an installed capacity of 142 MW. Iren SpA is based in Reggio Emilia, Italy.