First-quarter surprises sent two energy stocks racing in opposite directions Thursday. CMS ( CMS) -- the company that first made "round-trip" energy trading famous -- bounced on news that it had toppled Wall Street expectations by nearly doubling quarterly profits. But CMS' gain was relatively modest compared with the plunge in Reliant Resources ( RRI), which bloodied the entire sector by widening its quarterly loss and slashing its guidance for the year. After months of rebuilding following last summer's bombshell about bogus revenue-boosting round-trip trades, CMS showed signs of a rebound in the latest quarter. The Michigan-based utility posted first-quarter profits of $79 million, or 51 cents a share, up from the year-ago 32 cents a share. Profits from ongoing operations, while down a dime from 60 cents a year ago, more than doubled Wall Street expectations of 23 cents a share and triggered a rally in the stock. News of the upside surprise sent CMS shares surging 10.5% to $6.44. The shares have now almost doubled since bottoming out at $3.41 less than two months ago.
In the meantime, Reliant Resources reminded investors that the sector's woes are far from over. The Houston-based energy company posted a first-quarter loss of $462 million, or $1.59 a share, that was three times bigger than the loss suffered a year earlier. Even excluding special items -- which accounted for most of the net loss -- Reliant still ended the quarter deeper in the red than analysts had expected. The company reported a loss from ongoing operations of 9 cents a share, or 2 cents worse than Wall Street had projected. The latest surprise followed an even bigger miss last quarter. The company had no sunny guidance to offer, either. Rather, it lowered full-year earnings guidance to between 50 cents and 70 cents a share -- well short of the 81 cents Wall Street was anticipating. The stock plunged, falling as much as 20% to $4.55, before it clawed its way back above $5 in Wednesday's session.
Earlier this year, Reliant was singled out for particularly harsh criticism from federal regulators investigating claims that energy traders gamed the power market during the California energy crisis of 2000-01. The company nevertheless went on to ink its big financing package with lenders, fueling a rally that -- until Wednesday's hit -- had lifted Reliant shares to their highest level since last September. Reliant's plunge dragged the entire sector down on Wednesday. Other big losers were Mirant ( MIR) and Aquila ( ILA). Atlanta-based Mirant tumbled 8.6% to $2.75. And Kansas City-based Aquila slid 4.9% to $2.50.