CIG  Comp En De Mn Cemig Ads

Exchange

NYSE

Sector

Public Utilities

Industry

Electric Utilities: Central

Market Cap.

3.20B

Vuru Grade

50.55/100

Current Price

$2.54
+0.02 (+0.79%)

Growth Price

$6.27
Undervalued by 146.79%

Company Metrics

  • P/E 15.97
  • P/S 0.52
  • P/B 0.75
  • EPS 0.14
  • Cash ROIC 7.46%
  • Cash Ratio 0.24
  • Dividend 0.08 / 2.98%
  • Avg. Vol. 3.51M
  • Shares 1.26B
  • Market Cap. 3.20B

Company Description

Companhia Energetica De Minas Gerais engages in the generation, transmission, and distribution of electric power primarily in Rio de Janeiro. As of December 31, 2009, it generated electricity at 54 hydroelectric plants, 3 thermoelectric plants, and 2 wind farms, as well as had a total installed generation capacity of 6,642 megawatts. The company also owned and operated 294,552 miles of distributio... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Brazil utility Cemig may sell up to 6.5 billion reais in assets
Reuters - Jun 1, 2017
SAO PAULO (Reuters) - Brazil's state-run utility Companhia Energética de Minas Gerais is trying to sell assets worth 6.5 billion reais ($2 billion), the company said in a securities filing on Thursday.
Exclusive: Brazil's Cemig to fire CEO, CFO on Wednesday, sources say
Reuters - Dec 18, 2016
SAO PAULO (Reuters) - Cia Energética de Minas Gerais SA will announce the ouster of its chief executive officer and chief financial officer as early as Wednesday after the Brazilian utility's largest shareholder balked at the slow pace of a debt ...
Exclusive: Brazil's Cemig mulls sale of stake in venture with Vale: sources
Reuters - Nov 18, 2016
SAO PAULO - Cia Energética de Minas Gerais SA (Cemig)(CMIG4.SA) has decided to sell its minority stake in Aliança Geração de Energia SA, a Brazilian power generation joint-venture with Vale SA (VALE5.
Shares of CEMIG Slump Following Court Injunction
Motley Fool - Mar 22, 2017
Shares of Brazilian power company Companhia Energetica de Minas Gerais (CEMIG) (NYSE:CIG) opened trading down 10% today and were down 6% as of 11 a.m.
UPDATE 1-Brazil's Cemig names new CEO and CFO after clash with main shareholder
Reuters - Dec 21, 2016
BRASILIA, Dec 21 (Reuters) - Cia Energética de Minas Gerais SA has picked Bernardo Salomao as its new chief executive officer as part of a management overhaul that aims to speed up a debt-reduction plan, the power company said in a filing on ...
Brazil could reopen dam talks with Cemig if guarantees tendered
Nasdaq - Aug 17, 2017
SAO PAULO, Aug 17 (Reuters) - The Brazilian government could reopen talks to return the licensing of four hydropower dams withdrawn from Cia Energética de Minas Gerais SA, should the power utility present real guarantees backing up a deal, Mines and ...
It Seems Companhia Energetica de Minas Gers CEMIG (CIG) Will Go Down. Have ...
Press Telegraph - Aug 17, 2017
The stock of Companhia Energetica de Minas Gers CEMIG (NYSE:CIG) is a huge mover today! About 1.90 million shares traded. Companhia Energetica de Minas Gers CEMIG (NYSE:CIG) has risen 59.02% since August 17, 2016 and is uptrending.
Which Direction Are Companhia Energetica de Minas Gerais CEMIG (CIG) Shares ... - The Times
Brazil's Cemig profit misses estimates as financial income slumps
Business Insider - Aug 14, 2017
SAO PAULO, Aug 14 (Reuters) - Cia Energética de Minas Gerais SA missed second-quarter profit estimates as some costs rose faster than revenue and income from financial investments slumped, probably reflecting a decline in domestic borrowing costs.
Cia Energetica de Minas Gerais CEMIG-ADR (NYSE:CIG) Brazil's Steady Utilities Star
The Oracle Dispatch - Feb 23, 2017
Cia Energetica de Minas Gerais CEMIG-ADR (NYSE:CIG) is one of Brazil's brightest stars on the OTC. Brazilian electricity giant Cia Energetica de Minas Gerais CEMIG-ADR (NYSE:CIG) has been on a tear of late. The company's shares were trading near the ...
Cemig, Odebrecht split on Chinese offer for stake in power project: sources
Reuters - Jul 27, 2017
Odebrecht is in favor of the sale while Cemig, or Companhia Energética de Minas Gerais SA, believes SPIC's offer does not reflect a fair value of its stake, the sources said.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for CIG to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate CIG's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$2.54 Current Price

$6.27 Growth Price (DCF)

Undervalued by 146.79%


Growth Rate Assumed by Market: -500.00%


Future Free Cash Flow Growth Rate: -4.8%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$3.99 Book Price

Undervalued by 57.09%


Poor Cash Return on Invested Capital over the past 5 years

CIG has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

CIG has only created $7.46 of cash for every $100 invested.
Figures in BRL. Fiscal year ends in December
20122013201420152016
Free Cash Flow 847.00M 2.54B 2.81B 1.92B 72.00M
divided by
Invested Capital 21.38B 20.76B 22.15B 23.57B 27.85B
Cash ROIC 3.96% 12.23% 12.71% 8.16% 0.26%

Excellent Return on Equity over the past 5 years

Over the past 5 years, CIG has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

CIG has generated $21.91 of Earnings for every $100 of Shareholders' Equity.
Figures in BRL. Fiscal year ends in December
20122013201420152016
Net Income 4.27B 3.10B 3.14B 2.49B 334.00M
divided by
Stockholders' Equity 12.04B 12.64B 11.28B 13.00B 12.93B
Return on Equity 35.45% 24.56% 27.81% 19.18% 2.58%

Excellent Business Performance over the past 10 years

CIG has been able to maintain profitability in good times and bad. This could mean CIG has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

CIG has created positive free cash flow for 9 or more of the past 10 years.
Figures in BRL. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 1.72B 1.99B 2.47B 3.11B 1.12B 847.00M 2.54B 2.81B 1.92B 72.00M

Weak Balance Sheet

CIG's financial position is not ideal. The key is to check whether CIG is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in BRL. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 1.78B 1.97B 3.90B 3.30B 3.22B 5.09B 3.14B 2.73B 4.23B 2.74B
Current Assets 5.94B 6.22B 7.88B 8.08B 8.53B 11.99B 6.67B 6.55B 9.38B 8.29B
Total Assets 24.35B 24.78B 28.56B 33.56B 37.36B 40.77B 29.81B 35.00B 40.88B 42.04B
Current Liabilities 4.51B 4.89B 7.39B 6.40B 12.17B 14.31B 5.92B 10.12B 13.09B 11.45B
Total Liabilities 16.13B 15.45B 18.14B 22.08B 25.61B 28.73B 17.18B 23.72B 27.89B 29.11B
Stockholder' Equity 8.22B 9.33B 10.42B 11.48B 11.75B 12.04B 12.64B 11.28B 13.00B 12.93B
Current Ratio 1.32 1.27 1.07 1.26 0.70 0.84 1.13 0.65 0.72 0.72
TL-to-TA 0.66 0.62 0.64 0.66 0.69 0.70 0.58 0.68 0.68 0.69

Low or No Reinvestment of Profits over the past 10 years

CIG has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to CIG operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in BRL. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 3.83B 4.59B 4.80B - 3.29B 2.86B - - - 5.20B
Retained Earnings Growth - 19.90% 4.73% -100.00% - -13.27% -100.00% - - -

Inconsistent Net Profit Margins over the past 10 years

CIG potentially has a competitive advantage, however inconsistent profit margins are a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$15.35 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in BRL. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 1.62B 1.75B 1.77B 2.26B 2.42B 4.27B 3.10B 3.14B 2.49B 334.00M
divided by
Revenue 9.43B 9.83B 14.95B 12.86B 15.81B 18.46B 14.63B 19.54B 21.29B 18.77B
Net Profit Margin 17.16% 17.84% 11.82% 17.55% 15.27% 23.13% 21.22% 16.05% 11.70% 1.78%

Strong Pricing Power over the past 10 years

CIG has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$43.29 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in BRL. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 7.28B 6.93B 9.16B 4.57B 5.86B 6.08B 4.78B 6.74B 5.99B 4.34B
divided by
Revenue 9.43B 9.83B 14.95B 12.86B 15.81B 18.46B 14.63B 19.54B 21.29B 18.77B
Gross Margin 77.23% 70.48% 61.26% 35.50% 37.04% 32.92% 32.67% 34.48% 28.15% 23.13%

High Capital Intensity over the past 10 years

CIG spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

80.21% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in BRL. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 1.12B 971.00M 851.00M 347.00M 2.78B 2.27B 977.00M 920.00M 1.08B 1.14B
divided by
Net Income 1.62B 1.75B 1.77B 2.26B 2.42B 4.27B 3.10B 3.14B 2.49B 334.00M
Capital Expenditure Ratio 69.22% 55.39% 48.13% 15.37% 114.95% 53.13% 31.48% 29.33% 43.46% 341.62%

Inconsistent Dividend History over the past 10 years

CIG has started distributing dividends in the past couple years or has recently suspended their dividend distribution. The reliability of future distributions is unclear.
Figures in BRL. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 1.33B 865.00M 937.00M 1.83B 2.04B 1.75B - - - -
divided by
Shares Outstanding 545.70M 548.77M 685.15M 298.27M 682.41M 1.26B 1.65B - - 1.26B
Dividend Paid Per Share 1.45 0.93 0.81 3.64 1.77 0.82 - - - -
Price at Year End 12.25 9.54 16.58 15.68 17.79 10.80 7.66 5.03 1.53 2.28
Dividend Yield 11.84% 9.80% 4.89% 23.20% 9.94% 7.63% - - - -

History of Stock Buybacks over the past 10 years

CIG has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in BRL. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 545.70M 548.77M 685.15M 298.27M 682.41M 1.26B 1.65B - - 1.26B
Stock Bought Back - -0.56% -19.91% 129.71% -56.29% -45.77% -23.53% - - -100.00%
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