Companhia Energetica Minas Gerais (CIG) AI Stock Analysis

• Market Cap: $6.19B
• Dividend Yield: 10.19%
• Average Volume (3M): 4.67M
• Price to Earnings (P/E): 4.1
• Beta (1Y): 0.47
• Revenue Growth: 3.39%
• EPS Growth: 46.79%
• Country: US
• Employees: 5,028
• Sector: Utilities
• Sector Strength: 94
• Industry: Diversified Utilities
• EPS (TTM): 0.46
• Shares Outstanding: 1,905,179,900
• 10 Day Avg. Volume: 2,954,037
• 30 Day Avg. Volume: 4,669,517
• PEG Ratio: 0.29
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $2.60
• Price Target Upside: 37.57% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 0

Companhia Energetica Minas Gerais has a strong overall stock score driven by excellent financial performance with robust profitability and significant revenue growth. The valuation is highly attractive due to a low P/E ratio and high dividend yield. The recent earnings call was positive, reflecting significant financial achievements, although technical indicators suggest a cautious approach due to mixed signals.

Positive Factors

Dividends

The one-offs in the net income could result into +4% additional dividend yield in 2024.

Privatization

The privatization process is the main upside risk.

Negative Factors

Operational Performance

Cemig reported soft operational results with Adj. EBITDA at R$1.6bn, down 10% YoY and 4% below our estimates.

Privatization Complexity

There is a low likelihood of Minas Gerais state-owned enterprises' privatization or transfer of control to the Federal Government concluding in the short-term 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

CEMIG makes money primarily through the generation, transmission, and distribution of electricity. The company owns and operates a vast network of hydroelectric, thermal, and wind power plants, which allows it to generate electricity that it sells to residential, commercial, and industrial customers. Revenue is also generated through the provision of electricity distribution services, where CEMIG manages and maintains the infrastructure necessary to deliver electricity to end-users. Additionally, CEMIG earns income from its transmission operations by managing high-voltage power lines that transport electricity over long distances. The company may also engage in strategic partnerships and government contracts that enhance its operational capabilities and financial performance.

Companhia Energetica Minas Gerais Financial Statement Overview

Summary

Companhia Energetica Minas Gerais exhibits strong financial health with robust profitability, efficient capital use, and solid cash generation. The company has demonstrated significant revenue growth, although the decline in free cash flow growth requires attention. Overall, the financial position is sound, with a balanced approach to leverage and strong returns on equity.

Income Statement

The income statement shows strong profitability with a TTM gross profit margin of 23.31% and a net profit margin of 32.28%. The company has demonstrated impressive revenue growth, increasing from 2022 to TTM by 195.44%. The EBIT margin is robust at 0.05% for TTM, indicating efficient operations.

Balance Sheet

The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.52, indicating a manageable level of debt. The return on equity (ROE) is impressive at 11.71% for TTM, suggesting efficient use of equity capital. The equity ratio is solid at 44.52%, showing a healthy balance between liabilities and equity.

Cash Flow

The cash flow statement indicates strong cash generation with a free cash flow growth rate of -30.18% from 2022 to TTM, which requires monitoring. The operating cash flow to net income ratio is 2.87 for TTM, highlighting strong operational cash conversion. The free cash flow to net income ratio is 1.14, indicating solid free cash flow generation relative to net income.

Breakdown
Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Income Statement		Total Revenue
36.85B	34.46B	33.65B	25.23B	25.39B
	Gross Profit
6.82B	6.81B	6.72B	5.38B	5.79B
	EBIT
5.88B	5.69B	5.96B	4.94B	4.86B
	EBITDA
8.88B	5.48B	6.82B	5.70B	6.75B
	Net Income Common Stockholders
5.76B	4.09B	3.75B	2.86B	3.13B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.13B	4.24B	4.05B	5.30B	2.36B
	Total Assets
55.00B	53.67B	52.05B	54.08B	49.93B
	Total Debt
10.26B	10.94B	11.61B	15.25B	15.06B
	Net Debt
8.73B	9.49B	10.78B	13.57B	14.53B
	Total Liabilities
30.34B	31.89B	32.58B	36.60B	34.87B
	Stockholders Equity
22.79B	21.78B	19.46B	17.47B	15.05B
Cash Flow		Free Cash Flow
5.38B	6.32B	3.45B	8.43B	109.00M
	Operating Cash Flow
6.64B	6.61B	3.69B	8.61B	2.04B
	Investing Cash Flow
-3.97B	-3.21B	1.37B	-5.08B	-1.19B
	Financing Cash Flow
-2.58B	-2.79B	-5.91B	-2.39B	-1.20B

Companhia Energetica Minas Gerais Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1.89
• 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 1.89 is above the 20-day moving average (MA) of 1.74, above the 50-day MA of 1.82, and above the 200-day MA of 1.85, indicating a bullish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 64.53 is Neutral, neither overbought nor oversold. The STOCH value of 89.30 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
CIG	80 Outperform	$6.19B	4.07	28.91%	10.19%	3.39%	46.79%
ELP	77 Outperform	$5.75B	11.53	9.47%	2.66%	-4.45%	9.86%
ELPC	77 Outperform	$5.75B	10.43	9.47%	2.80%	-4.45%	9.86%
SRE	68 Neutral	$49.28B	17.12	9.55%	3.35%	-18.00%	-7.54%
Sector *	63 Neutral	$8.54B	12.48	6.21%	4.38%	3.32%	-10.32%
BIP	54 Neutral	$19.01B	2,700.93	0.96%	5.69%	17.33%	-92.62%
AES	52 Neutral	$7.25B	4.31	39.65%	6.90%	-3.14%	563.59%