Winter temperatures may be reaching record highs across the northeast and midwest of the U.S., but they are sending a chill through Wall Street.
said unseasonably warm weather could cut its earnings by as much as 10 cents a share.
CMS, which generates most of its revenue from its natural gas and electric utility,
, had been expected to earn 73 cents a share, according to a poll of analysts conducted by
First Call/Thomson Financial
CMS, based in Dearborn, Mich., slipped 11/16, or 2%, to close at 31, a 52-week low, following the announcement, and analysts warned that more utilities might issue similar warnings.
"It's not necessarily going to be a robust fourth quarter because of the abnormally warm temperatures so far this fall," said Gary Hovis, an energy analyst with
, adding that he expected energy utilities throughout the Northeast and upper Midwest to post softer-than-expected earnings.
The mild weather is also expected to weigh on heating oil and natural gas prices toward the end of the year.
CMS said in a statement that for October and November, warm weather resulted in lower utility natural gas sales and pipeline deliveries, including over 7 billion cubic feet less of natural gas sales had temperatures been as low as expected.
Dan Horn, an analyst at
Refco Energy Group
, said that if the weather didn't turn cold by the end of December he would expect the price of January natural gas futures to fall to about $2.40 per million British thermal units, from their Monday close of $2.64.
"If we don't have any cold weather by the end of December, we will see it back at $2.40," Horn said. Refco, a commodities trading house, does not currently hold positions in natural gas and heating oil.
The January futures contracts for heating oil are also expected to drop 3 cents to about 66 cents a gallon prior to their expiration at the end of the month. They closed at 69.44 cents a gallon on Monday.