Critical Comparison: EDP – Energias de Portugal (OTCMKTS:ELCPF) vs. CMS Energy (NYSE:CMS)

EDP – Energias de Portugal (OTCMKTS:ELCPF) and CMS Energy (NYSE:CMS) are both utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, valuation, analyst recommendations and dividends.

Institutional & Insider Ownership

31.6% of EDP – Energias de Portugal shares are owned by institutional investors. Comparatively, 93.6% of CMS Energy shares are owned by institutional investors. 0.5% of CMS Energy shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

EDP – Energias de Portugal pays an annual dividend of $0.13 per share and has a dividend yield of 2.7%. CMS Energy pays an annual dividend of $2.28 per share and has a dividend yield of 3.2%. EDP – Energias de Portugal pays out 48.4% of its earnings in the form of a dividend. CMS Energy pays out 68.5% 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 increased 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.

Analyst Ratings

This is a summary of current ratings and recommmendations for EDP – Energias de Portugal and CMS Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
EDP – Energias de Portugal	0	1	1	0	2.50
CMS Energy	0	6	6	0	2.50

CMS Energy has a consensus target price of $81.67, suggesting a potential upside of 13.75%. Given CMS Energy’s higher probable upside, analysts plainly believe CMS Energy is more favorable than EDP – Energias de Portugal.

Earnings and Valuation

This table compares EDP – Energias de Portugal and CMS Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
EDP – Energias de Portugal	N/A	N/A	N/A	$0.28	17.71
CMS Energy	$8.54 billion	2.64	$1.07 billion	$3.33	21.56

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

Profitability

This table compares EDP – Energias de Portugal and CMS Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
EDP – Energias de Portugal	N/A	N/A	N/A
CMS Energy	11.64%	10.76%	2.62%

Summary

CMS Energy beats EDP – Energias de Portugal on 12 of the 13 factors compared between the two stocks.

About EDP – Energias de Portugal

EDP – Energias de Portugal, S.A. engages in the generation, transmission, distribution, and supply of electricity in Portugal, Spain, France, Poland, Romania, Italy, Belgium, the United Kingdom, Greece, Colombia, Brazil, North America, and internationally. It operates through Renewables, Networks, and Client Solutions & Energy Management segments. The company primarily generates and sells electricity through hydro, CCGT, coal, wind, solar, nuclear, and cogeneration and waste sources. It has an installed capacity of 28 GW; and operates 380,788 kilometers of distribution network lines. The company is also involved in the supply of natural gas. In addition, it offers engineering, laboratory tests, professional training, and energy services, as well as property management services. The company's electricity and gas customers include domestic, industrial, commercial, agricultural, and others. The company was incorporated in 1976 and is headquartered in Lisbon, Portugal.

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.