CMIG4 shares fell 12.9% in November even as Cemig announced that its net income more than doubled in the third quarter of 2026. The contradiction has a clear explanation: out of R$ 1.72 billion in reported net income, R$ 774.6 million came from a provision reversal that does not generate cash, does not resolve the underlying litigation, and by definition is non-recurring. It is the adjusted net income of R$ 922.8 million—up 18% over Q3 2025—that the market uses as its benchmark.
CMIG4 Stock Quote Today: Why Did Profit Surge 115% While the Stock Fell?
The driver was a profit-sharing provision reversal. Cemig reassessed lawsuits regarding social security contributions charged on employee profit-sharing plans (PLR) from 1999 to 2016, downgrading its risk of loss from "probable" to "possible." This accounting classification change released R$ 1.07 billion in provisions—R$ 663.4 million in operating results and R$ 407.8 million in financial results—resulting in a net impact of R$ 774.6 million on quarterly earnings.
Downgrading the risk does not mean winning the lawsuits: if Cemig is ordered to pay, the provision would return to liabilities, and the profit that "entered" today would leave in the quarter of the decision. For this reason, analysts exclude the effect from recurring profitability calculations. Adjusting for non-recurring items, adjusted EBITDA reached R$ 1.99 billion—up 31.1% over Q3 2025.
+18% vs. Q3 2025; excludes the non-recurring R$ 774.6 million PLR reversal
+31.1% vs. Q3 2025; 24.1% margin on net revenue
+5.1% vs. Q3 2025; TUSD revenue grew 16.5% in the period
Vs. 2.30× the previous year; rises alongside heavy capex from the expansion plan
What Grew Legitimarily: Distribution Drove Operations
Cemig D—the distribution subsidiary, responsible for the largest share of revenue—delivered a 50% increase in adjusted EBITDA for the quarter. Three factors explain this: the 6.5% tariff adjustment in effect since May, lower post-employment expenses, and a revised methodology for expected credit losses. TUSD revenue, the grid "toll" compensating the company for use of the distribution system, grew 16.5% over the same quarter last year—a predictable revenue stream that rises with the consumer base and regulatory adjustments. Energy losses fell to 11.36% of billed volume, below the regulatory limit of 11.47%.
In the generation portfolio, the 30-year renewal of the Sá Carvalho HPP concession—formalized in August—secured the plant without a bidding process. For investors following the stock since September, when shares rose 4.26% during the week of the renewal, this risk was already priced in, but the concession is now formally guaranteed on the balance sheet for another three decades.
Debt Has Grown—And It Is the Main Point of Concern
Net debt reached R$ 19.7 billion at the end of September. The net debt-to-adjusted-EBITDA ratio rose to 2.43x—up from 2.30x a year earlier, still within the 3.5x covenant negotiated with creditors (the internal covenant ratio stood at 2.14x). This growth reflects the expansion plan: capital expenditures for the first nine months of 2026 totaled R$ 5.1 billion, an increase of 7.8%, and the company tapped the debt market twice in September alone—Cemig D raised R$ 2 billion in its 16th debenture issuance, and Cemig GT raised R$ 1 billion in its 13th.
The relief lies in debt maturity profiles: 83% of maturities fall due in 2029 or later, leaving cash flow comfortable in the short term and eliminating immediate refinancing risk. The challenge lies further out: the investment plan calls for R$ 43.7 billion between 2026 and 2030, and each new debt issuance in a high-interest-rate environment becomes more expensive. The financial costs pressing on cash flow are the trade-off for long-term growth—and the market prices this cost into the stock's current discount.
Why Does CMIG4 Continue to Fall Even as Operations Improve?
The market does not dispute operational growth—it questions the cost of debt going forward. In October, Bradesco BBI cut its price target for the stock and stated bluntly that dividends and discounted multiples do not outweigh the risks of a state-controlled company with growing capex amid high interest rates—the bank's report details these arguments. The stock price of R$ 10.57 implies a P/E ratio of 6.6 based on adjusted earnings—low for a quality company, but consistent with the discount the market applies to capital-intensive, leveraged utilities when interest rates remain elevated longer than expected.
A trailing 12-month dividend yield of 10.78% looks high, but part of the profit supporting those distributions included non-recurring items. For 2027, Cemig has interest on equity (JCP) to pay in two installments, but the payout size will depend on what Q4 2026 and early 2027 reveal about leverage trends. Equatorial's Q3 2026 results presented a similar dilemma across the electric sector: strong operational growth, rising debt, and the market marking down multiples.
The Q3 2026 results did not break the investment thesis—operations improved, and the R$ 200 million in JCP paid with an ex-date in September has already landed in shareholders' pockets. Future payouts are scheduled for June and December 2027. The critical point of attention is not the quarter itself, but the pace of investments over the coming years. If Cemig can grow adjusted EBITDA faster than debt, leverage will stabilize and 2027 distributions will remain secure. If not, the stock's discount will deepen—and the fair value calculated at R$ 19.88 will remain further out of reach than fundamentals suggest.
Upcoming distributions (June and December 2027) — Cemig declared JCP in two installments with an ex-date of September 23, 2026 (R$ 0.0350 per share each, payable in June and December 2027) and a second batch with an ex-date of June 24, 2026 (R$ 0.1102 per share each). Monitor whether Q4 2026 brings new distribution approvals before mid-year.
Q4 2026 Leverage (scheduled for release in February 2027) — if the net debt-to-adjusted-EBITDA ratio exceeds 2.7x, the market is likely to price in dividend cuts and revise price targets downward. Above 3.0x, the historical discount applied to state-controlled utilities will accelerate.
Cemig D tariff adjustment (expected in May 2027) — the 2026 adjustment was 6.5%. The next one depends on accumulated IGP-M inflation and ANEEL's periodic review. An adjustment above 6% supports adjusted EBITDA growth without adding debt; below 4%, it pressures the thesis and narrows the cushion for shareholder payouts.
