Snapshot
Cms Energy Corp reported $2.23B of revenue in Q4 2025, up 12.3% year over year, with diluted EPS of $0.94 and an operating margin of 19.5%.
- Revenue
- $2.23B
- YoY growth
- +12.3%
- Diluted EPS
- $0.94
- Operating margin
- 19.5%
What management said
- •More importantly, we have been successful getting top-tier outcomes to support our long track record of performance.
- •Two rate orders, electric and gas, both approved with constructive outcomes, delivering big wins for our customers, supporting critically important work to improve electric reliability and ensure gas safety across our system.
- •Our large load tariff was approved in November, priming the pump for growth.
- •And this track record of constructive outcomes continues to highlight what the CMS Energy team is able to achieve and further reaffirms Michigan's top-tier regulatory environment.
- •For 2025, we exceeded our adjusted earnings per share guidance and delivered $3.61 per share.
- •This is up over 8% from 2024's actual result and delivers that compounding of earnings you have come to expect from CMS Energy.
- •Throughout 2025, we continue to see strong performance at the utility, largely driven by constructive regulatory outcomes and robust performance at Northstar driving full-year results.
- •This performance allowed us the opportunity to exceed or beat guidance at year-end, deliver better service for our customers, and de-risk the business for the coming year.
- •For 2026, we are raising our annual guidance by $0.03, to $3.83-$3.90, which represents 6%-8% growth off of 2025 actual results, and we continue to guide toward the high end.
- •Our practice of rebasing higher off of actuals is a differentiator in this sector and provides a higher quality of earnings for our investors.
- •And we deliver year in and year out, easy, straightforward math, compounding growth, and bringing greater value, how we've done it for years.
- •We are also reaffirming our long-term guidance range of 6%-8% toward the high end.
What went well
- •CMS Energy exceeded its 2025 adjusted EPS guidance, delivering $3.61 per share, up over 8% from 2024's actual result.
- •The company's Large Load Tariff was approved in November, providing certainty for data centers while ensuring existing customers do not pay for the new-load investments.
- •The 20-year Renewable Energy Plan was approved, representing roughly $14 billion of customer investment opportunity over the next decade.
- •Two rate orders, electric and gas, were approved with constructive outcomes, and the company secured the first-ever storm deferral mechanism approved in June.
- •The company invested $3.8 billion in 2025 largely in line with original guidance, funded prudently through operating cash flow, bond and equity financings, and tax credit transfers, maintaining investment-grade credit ratings reaffirmed by all rating agencies.
- •2026 guidance was raised by $0.03 to $3.83-$3.90 per share, representing 6%-8% growth off 2025 actuals with continued confidence toward the high end.
What went wrong
- •The electric rate case Proposal for Decision (ALJ PFD) drew negative reactions, including an ROE of about 8.2% well below the national average, which management characterized as an outlier not well supported.
- •Parent-company refinancings (about $1.7 billion over the five-year plan) will occur at issuance levels higher than original funding, creating a negative arbitrage on non-recoverable parent financing costs.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Adjusted EPS | Full-year 2026 | $3.80-$3.87 (implied prior) | $3.83-$3.90 per share | Raised $0.03 on both ends; 6%-8% growth toward high end |
| Utility segment EPS | Full-year 2026 | n/a | $4.28-$4.33 adjusted earnings | n/a |
| NorthStar segment EPS | Full-year 2026 | n/a | $0.25-$0.30 contribution | n/a |
| Equity issuance | 2026 | ~$500 million in 2025 | ~$700 million ATM in 2026; ~$750 million average per year over five-year plan | Increase tied to larger capital plan |
| Weather (normal-weather assumption) | Full-year 2026 | Favorable 2025 temperatures | Plan for normal weather | $0.22 per share negative variance |
| Rate relief | Full-year 2026 | n/a | Residual gas/electric rate case benefits plus pending case outcomes | $0.37 per share positive variance |
| Cost structure | Full-year 2026 | n/a | CE Way productivity and more normalized storm activity | $0.12 per share positive variance |
| Dividend payout ratio | 2026 / five-year plan | n/a | ~60% in 2026, ~55% over five-year plan | Retaining more earnings to fund growth |
| Weather-normalized load growth | 2026 / outer years | n/a | ~3% in 2026, 2%-3% in outer years | n/a |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| 2025 adjusted EPS | $3.61, up over 8% from 2024 actual | Strong utility performance driven by constructive regulatory outcomes and robust performance at NorthStar. |
| 2025 capital invested | $3.8 billion, largely in line with original guidance | Investments to make electric and gas systems safer, more reliable, and cleaner for 3 million customers. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Rate-base / EPS bridge | n/a | 10.5% rate-base CAGR plus NorthStar/FCM gets to low-double-digit growth, bridged down to 7.5%-8% by ~3.5% equity dilution and parent refinancings | stable growth, higher funding cost |
| Data center pipeline | Tentative agreement announced in Q2; funnel building | Funnel has grown with two more data centers and two large manufacturers added in the last month; near-final rate contract on the closest opportunity; not in the plan (incremental) | growing |
| Electric rate case / ROE | ALJ PFD with ~8.2% ROE | Management expects ROE of 9.9% or better; staff revenue deficiency of $317 million against $423 million ask viewed as constructive | expects constructive outcome |
| Capital plan size | $20 billion five-year plan with $25 billion backlog | $24 billion five-year plan; backlog described as effectively infinite | expanding |
| Affordability / data center benefit | n/a | Self-generation saved customers $250 million in 2025; a 1 GW data center addition drives about 2 points of reduction in bill CAGR | improving |
Q&A summary
Where do data centers in Michigan stand, and how does timing fit the financial plan?
Rochow said he is very pleased with progress; the funnel has grown with two more data centers and two large manufacturers added recently. The data center tariff paved the way, the extraordinary facilities agreement is in place, and the rate contract is near final, requiring regulatory approval that should be a short process. Zoning is being finalized and the opportunity is incremental to the plan.
Walk through what's in and out of the 6%-8% plan given the 10.5% rate-base CAGR.
Hayes said data centers are not in the plan. The 10.5% rate-base CAGR plus NorthStar and FCM adds about a point to reach low-double-digit growth; this bridges down to roughly 7.5%-8% due to about 3.5% of equity dilution and ~$1.7 billion of parent refinancings at higher rates, with additional contingency for compounding off actuals, weather, and storm risk.
How concerning is the ALJ PFD's ~8.2% ROE and what is feedback into the March decision?
Rochow said he is not concerned; the 8.2% is an outlier, not well supported, and will be discounted. Applying a 9.9% ROE to the ALJ's revenue deficiency moves the number near staff's $317 million position against a $423 million ask. He expects a constructive outcome and an ROE of 9.9% or better, citing bench comments that excess has been driven out.
How does the 1-2 GW in final stages affect capacity needs and is it incremental to the 10.5% rate-base growth?
Rochow said data centers are not in the plan, so they would be incremental. The IRP must fill capacity gaps with batteries and natural gas alongside approved renewables, with 3% load growth next year, 2%-3% over the plan, and Karn 3 and 4 oil-fired peakers (about a gigawatt) retiring in 2031. Hayes added each gigawatt of load needs roughly $2.5 billion to $5+ billion, raising rate-base growth if landed.
How will equity needs be shaped going forward and will hybrids reduce them?
Hayes said equity increases with CapEx; the $24 billion plan is $4 billion higher than the prior $20 billion vintage, implying about $1.5 billion more equity at the historical 40 cents per dollar of incremental CapEx. The plan includes just over $1.5 billion of junior subordinated notes, weighted toward 2027-2028, and equity is front-end loaded commensurate with CapEx.
Is the $24 billion plan pulling $4 billion from the opportunity bucket, or incremental identification?
Hayes said it is not perfectly symmetric; the company dipped into the $25 billion backlog with the $4 billion increment, but the upcoming IRP and unconverted data center opportunities will add to the backlog, and FCM PPAs draw from it too, leaving the backlog effectively infinite.