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It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.
So if you're like me, you might be more interested in profitable, growing companies, like CMS Energy (NYSE:CMS). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.
View our latest analysis for CMS Energy
How Quickly Is CMS Energy Increasing Earnings Per Share?
If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS). That makes EPS growth an attractive quality for any company. CMS Energy managed to grow EPS by 13% per year, over three years. That's a pretty good rate, if the company can sustain it.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note CMS Energy's EBIT margins were flat over the last year, revenue grew by a solid 12% to US$7.3b. That's a real positive.
In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.
Fortunately, we've got access to analyst forecasts of CMS Energy's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are CMS Energy Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a US$18b company like CMS Energy. But we are reassured by the fact they have invested in the company. Given insiders own a small fortune of shares, currently valued at US$99m, they have plenty of motivation to push the business to succeed. This should keep them focused on creating long term value for shareholders.
It's good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. I discovered that the median total compensation for the CEOs of companies like CMS Energy, with market caps over US$8.0b, is about US$11m.