Companhia Energética de Minas Gerais SA ADR (NYSE:CIG.C) – A Quality Stock in the Utilities Sector

Companhia Energética de Minas Gerais SA ADR (NYSE:CIG.C) was identified through our Caviar Cruise quality stock screener, which focuses on financially strong companies with consistent growth and efficient capital allocation. The Brazilian utility firm demonstrates several characteristics that align with quality investing principles.

Key Strengths

• High Return on Invested Capital (ROIC) – With an ROIC (excluding cash and goodwill) of 16.33%, CIG.C efficiently generates profits from its capital investments, outperforming many industry peers.
• Strong EBIT Growth – The company has delivered a 17.37% annual EBIT growth over the past five years, indicating improving operational profitability.
• Healthy Debt Management – A Debt-to-Free Cash Flow ratio of 3.59 suggests the company can repay its debt in under four years using current cash flows, reflecting financial stability.
• Profit Quality – A five-year average Profit Quality of 139.7% means the company converts net income into free cash flow effectively, a sign of earnings reliability.

Fundamental Analysis Summary

Our fundamental report assigns CIG.C a neutral rating of 5 out of 10, noting strengths in profitability and financial health but cautioning on future earnings expectations. Key takeaways:

• Profitability: Strong ROIC and margins, though operating margins lag some competitors.
• Valuation: P/E of 6.61 is well below industry and S&P 500 averages, suggesting undervaluation.
• Growth: Past revenue growth has been solid (9.33% CAGR), but earnings are expected to decline (-25.52%) in coming years.
• Dividend: A 2.18% yield with a high payout ratio (61.32%) raises sustainability concerns.

While CIG.C is not without risks—particularly in earnings outlook and dividend sustainability—its strong ROIC, manageable debt, and cash flow efficiency make it a candidate for further research by quality-focused investors.

Our Caviar Cruise screener lists more quality stocks and is updated daily.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own analysis before making investment decisions.