Weighted
$59.45
Conviction
6.2/10
Decision
Starter long
Method
Residual income
Revised current conclusion
Bear $43.42, Base $60.59, Bull $73.21. Weighted $59.45. Expected return -12.9%. Historical original values are preserved only in labeled comparisons.
| Case | Probability | Current value | Return |
|---|---|---|---|
| bear | 25% | $43.42 | -36.4% |
| base | 50% | $60.59 | -11.3% |
| bull | 25% | $73.21 | 7.2% |
Company-specific method
Five-year clean-surplus residual income. Opening common book value, EPS, payout, dilution, earned-return spread and cost of equity are explicit. Dividend discount, rate-base earnings power, SOTP, justified P/E and EV/rate-base remain cross-checks.
Formula: BVPS plus present value of residual income, where residual income equals EPS minus cost of equity times opening BVPS.
Current to Bear, Base and Bull bridges
| Variable | Current | Bear | Base | Bull |
|---|---|---|---|---|
| rate base | Consumers Energy disclosed annual rate-base growth above 10%; frozen package does not publish one consolidated dollar total | [1.0, 1.08, 1.16, 1.25, 1.35] | [1.0, 1.1, 1.21, 1.33, 1.46] | [1.0, 1.11, 1.23, 1.37, 1.52] |
| electric load | 2025 weather-normalized Consumers electric sales baseline indexed 1.00 | [1, 0.99, 0.99, 1, 1.01] | [1, 1.01, 1.02, 1.03, 1.04] | [1, 1.02, 1.04, 1.06, 1.08] |
| gas load | 2025 weather-normalized Consumers gas deliveries baseline indexed 1.00 | [1, 0.99, 0.98, 0.97, 0.96] | [1, 1, 1, 1, 1] | [1, 1.002, 1.004, 1.006, 1.008] |
| customer rates | Consumers tariffs are jurisdiction and class specific; no valid single blended current rate | [1, 1.035, 1.07, 1.105, 1.14] | [1, 1.05, 1.1, 1.16, 1.22] | [1, 1.06, 1.13, 1.2, 1.28] |
| authorized roe | Frozen filings discuss MPSC-authorized returns; no single consolidated electric/gas allowed ROE is published | [0.092, 0.092, 0.092, 0.092, 0.092] | [0.097, 0.097, 0.097, 0.097, 0.097] | [0.1, 0.1, 0.1, 0.1, 0.1] |
| earned roe | H1 2026 consolidated annualized common earnings / opening parent equity is about 10.0%; not utility earned ROE | [0.085, 0.087, 0.089, 0.09, 0.09] | [0.095, 0.096, 0.097, 0.098, 0.098] | [0.101, 0.102, 0.103, 0.103, 0.104] |
| regulatory lag | MPSC general cases and riders; exact consolidated months are not a reported GAAP fact | [14, 14, 15, 15, 16] | [10, 9, 9, 8, 8] | [7, 7, 6, 6, 5] |
| operating expenses | FY2025 maintenance/other operating $1.727bn; total operating expenses $6.812bn | [1, 1.045, 1.09, 1.14, 1.19] | [1, 1.035, 1.07, 1.105, 1.14] | [1, 1.03, 1.06, 1.09, 1.12] |
| eps operating earnings | $3.83-$3.90 2026 adjusted EPS guidance; midpoint $3.865 and 2027 floor $4.08 | [4.02, 4.181, 4.348, 4.522, 4.703] | [4.136, 4.426, 4.736, 5.067, 5.422] | [4.194, 4.551, 4.938, 5.358, 5.813] |
| capex | FY2025 total capex $4.038bn; H1 2026 $2.006bn; plan $24.1bn through 2030 | [4.3, 4.4, 4.5, 4.6, 4.7] | [4.7, 4.8, 4.9, 4.9, 4.8] | [4.9, 5.0, 5.1, 5.1, 5.0] |
| depreciation | FY2025 D&A $1.306bn; H1 2026 $0.720bn | [1.45, 1.55, 1.65, 1.75, 1.85] | [1.48, 1.6, 1.72, 1.85, 1.98] | [1.5, 1.64, 1.79, 1.95, 2.12] |
| working capital | No isolated valuation shortcut; fuel recovery and construction timing dominate | [0.35, 0.45, 0.55, 0.65, 0.75] | [0.25, 0.3, 0.35, 0.4, 0.45] | [0.2, 0.25, 0.3, 0.35, 0.4] |
| taxes | FY2025 GAAP income tax expense $0.246bn; H1 2026 $0.118bn | [0.19, 0.2, 0.2, 0.21, 0.21] | [0.2, 0.21, 0.21, 0.22, 0.22] | [0.21, 0.21, 0.22, 0.22, 0.23] |
| debt | 2026-06-30 current long-term debt $0.864bn plus noncurrent long-term debt $18.172bn | [19.0, 20.5, 22.0, 23.5, 25.0] | [19.0, 20.3, 21.6, 22.9, 24.2] | [19.0, 20.0, 21.0, 22.0, 23.0] |
| equity issuance dilution | 313.6m shares at 2026-06-30; plan includes about $700m common equity funding | [318, 322, 326, 330, 334] | [317, 320, 323, 326, 329] | [316, 318, 320, 322, 324] |
| dividend growth payout | 2026 annualized dividend about $2.17/share; roughly 56% of $3.865 guidance midpoint | [0.66, 0.66, 0.66, 0.66, 0.66] | [0.6, 0.6, 0.6, 0.6, 0.6] | [0.56, 0.56, 0.56, 0.56, 0.56] |
| cost of equity | Reassessed from regulated-utility duration, Michigan jurisdiction, credit and execution | [0.095, 0.095, 0.095, 0.095, 0.095] | [0.085, 0.085, 0.085, 0.085, 0.085] | [0.08, 0.08, 0.08, 0.08, 0.08] |
| terminal economics and payout | Clean-surplus opening book $31.167092/share; terminal value depends on sustainable earned spread | {'ri_growth': 0, 'payout': 0.66} | {'ri_growth': 0.02, 'payout': 0.6} | {'ri_growth': 0.025, 'payout': 0.56} |
Scorecard
| Pillar | Original | Revised |
|---|---|---|
| business quality | 7.0 | 7.0 |
| management quality | 8.0 | 8.0 |
| industry tailwind | 7.8 | 7.8 |
| valuation | 7.5 | 4.5 |
| risk asymmetry | 6.8 | 4.0 |
Conviction 7.520 to 6.220. Valuation and Risk change only because documented rubric bands changed.