Companhia Energetica Minas Gerais (CIG) AI Stock Analysis

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Companhia Energetica Minas Gerais

(NYSE:CIG)

80Outperform

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

Dividend Yield

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

Privatization

The privatization process is the main upside risk.

Negative Factors

Government Control

A transfer of control to the Federal Government could result in a 17% negative NPV due to higher-than-expected costs.

Operational Performance

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

Companhia Energetica Minas Gerais (CIG) vs. S&P 500 (SPY)

Market Cap

$5.61B

Dividend Yield11.26%

Average Volume (3M)4.79M

Price to Earnings (P/E)3.7

Beta (1Y)0.44

Revenue Growth3.39%

EPS Growth46.79%

CountryUS

Employees5,028

SectorUtilities

Sector Strength90

IndustryDiversified Utilities

Share Statistics

EPS (TTM)0.46

Shares Outstanding1,905,179,900

10 Day Avg. Volume3,683,107

30 Day Avg. Volume4,792,192

Financial Highlights & Ratios

PEG Ratio0.26

Price to Book (P/B)N/A

Price to Sales (P/S)0.83

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$2.60

Price Target Upside52.94% Upside

Rating ConsensusHold

Number of Analyst Covering0

Companhia Energetica Minas Gerais Business Overview & Revenue Model

Company DescriptionCompanhia 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 MoneyCEMIG 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

Very Positive

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

Positive

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

Very Positive

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.

TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
10.18T	36.85B	34.46B	33.65B	25.23B	25.39B
	Gross Profit
2.37T	6.82B	6.81B	6.72B	5.38B	5.79B
	EBIT
9.79B	5.88B	5.69B	5.96B	4.94B	4.86B
	EBITDA
1.75T	8.88B	5.48B	6.82B	5.70B	6.75B
	Net Income Common Stockholders
3.28T	5.76B	4.09B	3.75B	2.86B	3.13B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.50B	3.13B	4.24B	4.05B	5.30B	2.36B
	Total Assets
30.05B	55.00B	53.67B	52.05B	54.08B	49.93B
	Total Debt
11.82B	10.26B	10.94B	11.61B	15.25B	15.06B
	Net Debt
7.33B	8.73B	9.49B	10.78B	13.57B	14.53B
	Total Liabilities
19.32B	30.34B	31.89B	32.58B	36.60B	34.87B
	Stockholders Equity
10.73B	22.79B	21.78B	19.46B	17.47B	15.05B
Cash Flow		Free Cash Flow
3.76B	5.38B	6.32B	3.45B	8.43B	109.00M
	Operating Cash Flow
9.44B	6.64B	6.61B	3.69B	8.61B	2.04B
	Investing Cash Flow
-5.80B	-3.97B	-3.21B	1.37B	-5.08B	-1.19B
	Financing Cash Flow
-2.30B	-2.58B	-2.79B	-5.91B	-2.39B	-1.20B

Companhia Energetica Minas Gerais Technical Analysis

Technical Analysis Sentiment

Negative

Last Price1.70

Price Trends

50DMA

1.84

Negative

100DMA

1.83

Negative

200DMA

1.85

Negative

Market Momentum

MACD

-0.03

Positive

RSI

34.00

Neutral

STOCH

3.97

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CIG, the sentiment is Negative. The current price of 1.7 is below the 20-day moving average (MA) of 1.77, below the 50-day MA of 1.84, and below the 200-day MA of 1.85, indicating a bearish trend. The MACD of -0.03 indicates Positive momentum. The RSI at 34.00 is Neutral, neither overbought nor oversold. The STOCH value of 3.97 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CIG.

Companhia Energetica Minas Gerais Risk Analysis

Companhia Energetica Minas Gerais disclosed 60 risk factors in its most recent earnings report. Companhia Energetica Minas Gerais reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Companhia Energetica Minas Gerais Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CIG	80 Outperform	$5.61B	3.68	28.91%	11.26%	3.39%	46.79%
ELP	77 Outperform	$5.20B	2.29	9.47%	3.02%	-4.45%	―
ELPC	77 Outperform	$5.20B	9.31	9.47%	3.08%	-4.45%	9.86%
Sector *	65 Neutral	$11.90B	15.77	6.20%	4.52%	5.53%	-8.93%
SRE	64 Neutral	$44.53B	15.47	9.55%	3.67%	-18.00%	-7.54%
AES	59 Neutral	$7.33B	4.36	39.65%	6.73%	-3.14%	563.59%
BIP	54 Neutral	$18.42B	2,616.67	0.96%	5.82%	17.33%	-92.62%

* Utilities Sector Average

Performance Comparison

CIG

Companhia Energetica Minas Gerais

1.70

0.02

1.19%

BIP

Brookfield Infrastructure

28.26

4.15

17.21%

ELP

Companhia Paranaense de Energia Pfd

7.30

0.40

5.80%

SRE

Sempra Energy

68.31

2.32

3.52%

AES

10.30

-5.14

-33.29%

ELPC

Companhia Paranaense de Energia Sponsored ADR

6.51

0.43

7.07%

Companhia Energetica Minas Gerais Earnings Call Summary

Earnings Call Date: Mar 20, 2025 | % Change Since: -12.37% | Next Earnings Date: May 7, 2025

Earnings Call Sentiment Positive

Cemig reported a record-breaking financial performance with significant investments and sustainability achievements, despite some expected challenges in trading margins and specific segments like Gasmig. The overall sentiment is positive, driven by strong growth and strategic achievements.

Highlights

Record-Breaking Financial Performance

Cemig achieved the highest EBITDA in its history at BRL11.3 billion, representing a significant growth compared to the previous year. Additionally, the company recorded the highest net profit and annual CapEx in its history, and received a AAA rating from Fitch.

Successful Investment and Divestment Strategy

The company invested BRL5.7 billion, a 34.8% annual average growth since 2018, and completed significant divestments including the sale of Alianca Energia, positively impacting tariff reviews and profitability.

Strong Sustainability Achievements

Cemig maintained a 100% clean energy matrix, remained in the DJSI for the 25th consecutive time, and was included in the S&P Global Sustainability Yearbook 2024. The company also adhered to the Utility for NetZero Alliance and issued renewable energy certificates.

Positive Shareholder Returns

The company reported the highest yield in the electric sector at 15%, with a 43% increase in preferred shares and a BRL7 billion market value increase. Cemig plans to distribute BRL5 billion in dividends if approved.

Lowlights

Trading Margin Decline

There was an expected decline in trading company margins, resulting in a BRL600 million drop in EBITDA for the year.

Gasmig Performance Challenges

Gasmig reported a reduction in industrial client consumption and lower EBITDA and net profit. However, investments are being made to expand the pipeline network.

Non-Recurring Financial Effects

Several non-recurring financial effects impacted results, including the sale of assets and tariff review impacts, which complicate year-over-year comparisons.

Company Guidance

In the Fourth Quarter 2024 Earnings Video Conference Call, Cemig reported unprecedented achievements, highlighting a remarkable fiscal year. The company achieved its highest-ever EBITDA of BRL11.3 billion and net profit, marking a 500-600% increase in key financial indicators compared to 2018. Cemig also reached a record annual CapEx of BRL5.7 billion, a substantial increase from BRL954 million in 2018, and secured a AAA rating from Fitch. The company successfully executed a divestment program, including the sale of Alianca Energia, and benefited from a significant BRL1.5 billion tariff review for transmission. Cemig's shares increased by 43%, adding BRL7 billion in market value, and the company plans to distribute BRL5 billion in dividends. Additionally, the company's commitment to sustainability is reflected in its 100% clean energy matrix and inclusion in the DJSI for the 25th consecutive year, among other accolades. Looking forward, Cemig plans to invest BRL59.1 billion from 2019 to 2028, focusing on infrastructure development, including substations and gas pipelines, aiming to enhance service quality and drive regional growth.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.