CMS VS EVRG: Which Electric Utility Stock Offers Better Return?
Companies operating in the Zacks Utility - Electric Power industry are engaged in the production and supply of electricity to millions of consumers across the United States. These utilities benefit from regulated frameworks that ensure cost recovery through rate hikes, while increasing customer demand drives earnings growth. These utilities increase shareholder value through steady dividends and planned buybacks, making them attractive investment options.
Electricity demand in the United States is rising, driven by data center growth, industrial reshoring, transportation electrification and higher residential usage. Companies operating in this industry are focusing on renewable energy projects, grid modernization and strengthening distribution networks to maintain service reliability.
Amid the growing importance of electricity generation and distribution companies, let us compare CMS Energy Corporation CMS and EvergyEVRG. These two electric utilities, supported by their regulated structure, benefit from a rise in demand for service, data center growth, strong investment in infrastructure development and renewable expansion.
CMS Energy benefits from its regulated utility business, which generates stable cash flows and consistent earnings. The company’s significant capital investment plan focuses on upgrading and expanding electric and natural gas infrastructure, improving grid reliability, resilience and service quality. These investments are expected to drive rate base growth and support long-term earnings expansion. Combined with a favorable regulatory environment and rising energy demand, CMS Energy remains well-positioned to create sustainable value for shareholders.
Evergy presents a compelling investment case supported by its regulated utility business, which generates consistent earnings and dependable cash flows. The company is investing heavily in transmission and distribution infrastructure upgrades to improve grid resilience, reliability and operational efficiency. Growing power demand from data centers and other digital infrastructure projects within its service areas provides an additional growth catalyst. These strategic capital investments are expected to expand Evergy’s rate base, drive long-term
earnings growth and create sustainable value for shareholders.
CMS Energy and Evergy are among the leading utilities. Comparing their fundamentals can reveal which stock presents the most attractive investment opportunity.
CMS & EVRG’s Earnings Growth Projections
The Zacks Consensus Estimate for EVRG’s earnings per share is pegged at $4.25 in 2026 and $4.55 in 2027, suggesting year-over-year growth of 10.97% and 7.01%, respectively. EVRG’s long-term (three to five years) earnings growth is currently pinned at 9.07%.
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The Zacks Consensus Estimate for CMS’ earnings per share is pegged at $3.87 in 2026 and $4.16 in 2027, suggesting year-over-year growth of 7.20% and 7.59%, respectively. CMS’ long-term earnings growth is currently pinned at 7.14%.
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Debt to Capital
The Zacks Utilities sector is highly capital-intensive, and companies often depend on debt financing to support operations, maintain reliability and meet growing demand. These utilities supplement internally generated cash flows with capital market borrowings to fund long-term investments and drive sustainable growth.
Evergy’s debt-to-capital ratio stands at 56.97%, below CMS Energy’s 65.18% and the industry average of 59.94%. Both companies rely on debt financing, with CMS carrying higher leverage than EVRG and the industry average, indicating greater dependence on borrowed capital.
Return on Equity
Return on Equity (“ROE”) evaluates management efficiency in utilizing shareholders’ funds to generate returns. A higher ROE reflects a company’s effective utilization of shareholder funds to create value and drive profit growth.
CMS Energy's current ROE is 12.17%, outperforming Evergy's 9.10% and the industry's 11.09%.CMS utilizes shareholders’ capital more efficiently and generates higher profits.
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CMS & EVRG’s Dividend Yield
Dividends are regular payments distributed by a utility company to reward its shareholders for their investment. Consistent dividend payouts reflect stable cash flows and management’s commitment to delivering reliable returns, making utilities attractive to income-focused and long-term investors.
Currently, Evergy’s dividend yield is 3.36%, while CMS Energy’s dividend yield is 3.11%. The dividend yields of both companies are higher than the S&P 500’s yield of 1.44%.
Capital Investment Plans
Utilities’ operations are capital-intensive, requiring huge capital investment for infrastructure development and replacement. These investments improve service quality, support renewable energy storage expansion, replacement of outdated equipment and grid modernization.
CMS Energy aims to invest $24 billion during 2026-2030 to upgrade infrastructure, support cleaner energy generation and drive 6-8% earnings growth. Evergy plans to invest $21.6 billion during 2026-2030, including more than $3 billion for new generation capacity to meet rising customer demand, supporting 11.5% rate base growth and 6-8% earnings growth.
Price Performance
Evergy’s shares have gained 14.3% over the past six months compared with CMS Energy's rally of 6%.
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Summing Up
CMS Energy and Evergy both gain from rising demand for the service, data center growth, renewable expansion and heavy investment in infrastructure to reliably serve millions of customers across the United States.
EVRG, supported by stable earnings per share growth, lower debt levels, an attractive dividend yield and better stock performance, appears to be a more attractive choice in the utility sector.
Based on the above discussion, Evergy currently has an edge over CMS Energy, though both carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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