Companhia Energetica de Minas Gerais (CIG): Clues to Figure Out Next Bull Run

Analysts at Goldman cut their rating on shares of Companhia Energetica de Minas Gerais (NYSE:CIG) from Neutral to Sell in their opinion released on January 03. UBS analysts have downgraded their rating of CIG stock from Buy to Neutral in a separate flash note to investors on October 18. Analysts at JP Morgan downgraded the stock to a Neutral call from its previous Overweight stance, in a research note that dated back to April 04.

By watching the trading activity of corporate insiders, it will become easier to get a sense of Companhia Energetica de Minas Gerais (NYSE:CIG)’s prospects.

Companhia Energetica de Minas Gerais (CIG) is expected to jump by -11.76 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $4.61-month high price target. This represents a whopping 23.26 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $3.29, which represents a return potential of -12.03 percent when compared to the closing price of the stock of $3.74 on Friday, January 11. The lowest price target for the stock is $2.59 — slightly more than -30.75 percent from CIG’s current share price.

The shares are currently floating around the first support level of $3.65. Below this, the next support is placed in the zone of $3.56. Till the time, the CIG stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 66.33 on daily chart, which may remain a cause for concern. If the price breaks below $3.56 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $3.79 mark may result into a pull-back move towards $3.84 level.

CIG shares accumulated 0.02 points or 0.54 percent on Friday to $3.74 with a light trade volume of 5.715 million shares. After opening the session at $3.64, the shares went as high as $3.75 and as low as $3.61, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $5.68 billion and now has 1.52 billion shares outstanding. Companhia Energetica de Minas Gerais (CIG) stock has gained 21.95 percent of market value in 21 trading days.

CIG stock has a trailing 3-year beta of 0.25, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $0.23 a share in the trailing twelve months. The stock’s value has surged 5.06 percent year to date (YTD) against a rise of 80.88 percent in 12 month’s time. The company’s shares still trade -1.53 percent away from its 1-year high of $3.80 and 142.33 percent up from 52-week low of $1.54. The average consensus rating on the company is 2.3, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Shares of Companhia Energetica de Minas Gerais (CIG) are trading at a P/E ratio of 16.73 times earnings reported for the past 12 months. The industry CIG operates in has an average P/E of 13.22. Its P/E ratio went as low as 3.03X and as high as 27.92 over the 5-year span. Further, it is sporting a 0.91 on the Price-to-Sales ratio. Compare this with the industry average P/S of 2.19. 20.1 percent is the gross profit margin for Companhia Energetica de Minas Gerais and operating margin sits at 13.7 percent. Along with this, the net profit margin is 4.8 percent.