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CMS Energy (CMS Energy) Predictability Rank


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What is CMS Energy Predictability Rank?

1 (5)

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

CMS Energy Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

PredictablesNon-PredictableAll stocks
Total Number of stocks57018332403
Total Lost Money61830891
Total Lost More Than 50%18412430
Total Lost More Than 90%48690
Average Gain260.6%100.0%138.1%
Median Gain150.0%13.0%39.0%
Maximum Gain2852.0%11483.0%11483.0%
Maximum Loss-100.0%-100.0%-100.0%
Annualized Average Gain12.7%6.7%8.4%
Annualized Median Gain8.9%1.1%3.1%


















For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank5-Star4.5-Star4-Star3.5-Star3-Star2.5-Star2-Star1-Star (non-predictable)Average among all
% Out of All 2403 Stocks 3.3% 2.9% 3.7% 3.3% 3.3% 3.7% 3.3% 76.3% 100%
% that are in Loss (10y) 3% 10% 8% 9% 11% 18% 16% 45% 37%
Average Gain (10y) 364.6% 330.9% 278.0% 235.1% 243.5% 227.8% 154.8% 100.0% 138.1%
Median Gain (10y) 238.5% 193.5% 171.0% 159.0% 132.5% 113.5% 87.0% 13.0% 39.0%
Maximum Gainer 2228.0% 2547.0% 2452.0% 2852.0% 2432.0% 1892.0% 1807.0% 11483.0% 11483.0%
Maximum Loser -82.0% -53.0% -67.0% -100.0% -83.0% -100.0% -78.0% -100.0% -100.0%
Annualized Average Gain 15.4% 14.6% 13.2% 12.0% 12.2% 11.7% 9.1% 6.7% 8.4%
Annualized Median Gain 12.1% 10.6% 9.8% 9.3% 8.2% 7.3% 6.0% 1.1% 3.1%
















For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

Also read:

Part II: What worked in the market from 1998-2008? Part II: Role of Valuations
Part III: Intrinsic Value, Discounted Cash Flow and Margin of Safety

CMS Energy Predictability Rank Related Terms

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CMS Energy (CMS Energy) Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Utilities » Utilities - Regulated » CMS Energy Corp (NYSE:CMS) » Definitions » Predictability Rank
Comparable Companies
CNP AEE PPL ES AGR FE DTE ETR LNT EVRG NEE SO DUK LSE:NG. AEP PCG D BOM:532555 EXC PEG
Traded in Other Exchanges
CMSpC.PFD:USA CMS1:Mexico CSG:Germany CSG:Germany
Address
One Energy Plaza, Jackson, MI, USA, 49201
Website
https://www.cmsenergy.com
CMS Energy is an energy holding company with three principal businesses. Its regulated utility, Consumers Energy, provides regulated natural gas service to 1.8 million customers and electric service to 1.9 million customers in Michigan. CMS Enterprises is engaged in wholesale power generation, including contracted renewable energy. CMS sold EnerBank in October 2021.
Executives
Brandon J. Hofmeister officer: Senior Vice President ONE ENERGY PLAZA, JACKSON MI 49201
Brian F Rich officer: Senior Vice President ONE ENERGY PLAZA, JACKSON MI 49201
John G Russell director ONE ENERGY PLAZA, JACKSON MI 49201
Jon E Barfield director 1255 COTTINGHAM RO HOME, BLOOMFIELD HILLS MI 48304
Catherine A Hendrian officer: Senior Vice President ONE ENERGY PLAZA, JACKSON MI 49201
Ralph Izzo director PSEG 80 PARK PLAZA, T6B NEWARK NJ 07102-4194
Shaun M Johnson officer: SVP and General Counsel ONE ENERGY PLAZA, JACKSON MI 49201
Scott B Mcintosh officer: VP, Controller, CAO ONE ENERGY PLAZA, JACKSON MI 49201
Dhenuvakonda Rao Venkat officer: Senior Vice President ONE ENERGY PLAZA, JACKSON MI 49201
Tonya L Berry officer: Senior Vice President ONE ENERGY PLAZA, JACKSON MI 49201
Jean-francois Brossoit officer: Senior Vice President ONE ENERGY PLAZA, JACKSON MI 49201
Glenn P Barba officer: VP, Controller, CAO ONE ENERGY PLAZA, JACKSON MI 49201
William D Harvey director 5 SHADE TREE COURT, MADISON WI 53717
Ronald J Tanski director NATIONAL FUEL GAS COMPANY, 6363 MAIN ST, WILLIAMSVILLE NY 14221
Kurt L Darrow director ONE LA-Z-BOY DRIVE, MONROE MI 48162