Companhia Energetica Minas Gerais (CIG) AI Stock Analysis

• Market Cap: $6.50B
• Dividend Yield: 4.68%
• Average Volume (3M): 2.28M
• Price to Earnings (P/E): 4.5
• Beta (1Y): 0.41
• Revenue Growth: -4.14%
• EPS Growth: 13.02%
• Country: US
• Employees: 5,028
• Sector: Utilities
• Sector Strength: 89
• Industry: Diversified Utilities
• EPS (TTM): N/A
• Shares Outstanding: 1,905,179,900
• 10 Day Avg. Volume: 2,189,572
• 30 Day Avg. Volume: 2,276,395
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.07
• Enterprise Value/Revenue: 0.17
• Enterprise Value/Gross Profit: 0.87
• Enterprise Value/Ebitda: 0.61
• 1Y Price Target: $2.00
• Price Target Upside: 0.50% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

• Rating: 75 Outperform
• Price Target: $2.00 ▲(0.50% Upside)

The overall stock score of 75 reflects a combination of strong valuation metrics and solid financial performance, despite some operational challenges. The low P/E ratio and attractive dividend yield are significant positives, while the financial performance indicates stability with areas for improvement in cash flow management. The earnings call highlights strategic growth initiatives, although challenges in specific segments remain.

Positive Factors

Dividends

The one-offs in the net income could result in a 4% additional dividend yield.

Privatization

The privatization process is the main upside risk, potentially boosting stock value.

Negative Factors

Operational Performance

Cemig reported soft operational results with Adj. EBITDA down 10% YoY.

Privatization Complexity

There is a low likelihood of Minas Gerais state-owned enterprises' privatization concluding due to complexity.

Companhia Energetica Minas Gerais Business Overview & Revenue Model

Company Description

Companhia Energética de Minas Gerais, through its subsidiaries, engages in the generation, transmission, distribution, and sale of energy in Brazil. As of December 31, 2021, the company operated 70 hydroelectric, wind, and solar plants with an installed capacity of 5,700 MW; 339,086 miles of distribution lines; and 4,449 miles of transmission lines. It is also involved in the acquisition, transportation, and distribution of gas and its sub products and derivatives; provision of cloud solution, IT infrastructure, IT management, and cybersecurity services; provision of technology systems and systems for operational management of public service concessions; sale and trading of energy; provision of telecommunications services; and distributed generation, account services, cogeneration, energy efficiency, and supply and storage management activities. The company was incorporated in 1952 and is headquartered in Belo Horizonte, Brazil.

How the Company Makes Money

CIG generates revenue primarily through the sale of electricity to end-users, including residential, commercial, and industrial customers. The company's core revenue streams include electricity generation from its diverse power plants, which harness both renewable and non-renewable resources. Additionally, CIG earns income from the transmission and distribution of electricity across its operational regions. The company may also benefit from regulatory frameworks and agreements that allow for adjustments in tariff rates, enabling it to optimize its pricing strategy. Partnerships with governmental and private entities for energy projects and infrastructure development further contribute to its financial performance.

Companhia Energetica Minas Gerais Financial Statement Overview

Summary

Companhia Energetica Minas Gerais demonstrates solid revenue growth and profitability, with a strong net profit margin and a balanced debt-to-equity position. However, there are concerns regarding declining EBITDA margins and reduced free cash flow, which could impact future financial flexibility. The company shows overall financial stability with room for improvement in operational efficiency and cash flow management.

Income Statement

The company has shown a consistent growth in revenue over the years, with a TTM (Trailing-Twelve-Months) revenue of 39.89 billion compared to 39.82 billion in the previous annual period. Gross Profit Margin has decreased to 7.20% in the TTM from 7.90% in the last annual report, while the Net Profit Margin slightly improved to 17.56% in the TTM, indicating effective cost management. However, the EBIT and EBITDA margins have declined, suggesting potential challenges in operational efficiency.

Balance Sheet

The company's debt-to-equity ratio is healthy at 0.56, reflecting a balanced approach to leveraging debt. The Return on Equity (ROE) for the TTM stands at 25.09%, showcasing strong profitability relative to equity. The equity ratio is at 43.67%, indicating a solid equity base. Despite these strengths, a slight increase in total liabilities suggests increased leverage, which could pose future risks.

Cash Flow

Free Cash Flow has decreased significantly in the TTM to 1.67 billion from 4.58 billion in the previous annual period, indicating reduced cash generation capacity. The Operating Cash Flow to Net Income ratio is robust at 1.16, demonstrating good cash conversion efficiency. However, the Free Cash Flow to Net Income ratio dropped to 0.24, raising concerns about the sustainability of cash flow generation.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	39.82B	36.85B	34.46B	33.65B	25.23B
Gross Profit	7.83B	8.38B	6.81B	6.72B	5.38B
EBITDA	11.74B	9.15B	6.24B	6.92B	6.20B
Net Income	7.12B	5.76B	4.09B	3.75B	2.86B
Balance Sheet
Total Assets	59.73B	55.00B	53.67B	52.05B	54.08B
Cash, Cash Equivalents and Short-Term Investments	3.45B	3.13B	4.24B	4.05B	5.30B
Total Debt	12.71B	10.26B	10.94B	11.61B	15.25B
Total Liabilities	32.34B	30.34B	31.89B	32.58B	36.60B
Stockholders Equity	27.38B	24.65B	21.78B	19.46B	17.47B
Cash Flow
Free Cash Flow	4.58B	5.38B	6.32B	3.45B	8.43B
Operating Cash Flow	5.50B	6.64B	6.61B	3.69B	8.61B
Investing Cash Flow	-2.38B	-3.97B	-3.21B	1.37B	-5.08B
Financing Cash Flow	-2.76B	-2.58B	-2.79B	-5.91B	-2.39B

Companhia Energetica Minas Gerais Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1.99
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CIG, the sentiment is Positive. The current price of 1.99 is above the 20-day moving average (MA) of 1.86, above the 50-day MA of 1.88, and above the 200-day MA of 1.76, indicating a bullish trend. The MACD of 0.01 indicates Negative momentum. The RSI at 68.01 is Neutral, neither overbought nor oversold. The STOCH value of 92.02 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CIG.

Companhia Energetica Minas Gerais Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ELP	79 Outperform	$6.68B	12.97	9.81%	6.21%	-5.28%	14.50%
SRE	77 Outperform	$53.56B	19.88	8.87%	3.08%	0.46%	-11.77%
CIG	75 Outperform	$6.50B	4.51	26.38%	4.68%	-4.14%	13.02%
ELPC	71 Outperform	$6.68B	11.90	9.81%	6.29%	-5.28%	14.50%
Sector *	67 Neutral	$17.90B	18.84	6.87%	3.41%	6.95%	8.31%
AES	64 Neutral	$9.11B	9.04	21.17%	5.42%	-3.19%	30.48%
BIP	63 Neutral	$19.67B	1,554.64	1.06%	5.51%	8.86%	―