Sempra Energy (SRE) AI Stock Analysis

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Sempra Energy

(NYSE:SRE)

64Neutral

Sempra Energy's overall score reflects a balance of strong financial fundamentals and long-term growth prospects against near-term challenges and technical weakness. The company's profitability and strategic investments support its outlook, though technical indicators suggest current bearish momentum. Valuation is moderate, with a reasonable dividend yield but a high P/E ratio.

Positive Factors

Capital Plan

The updated $56bn capital plan drives 10% rate base growth.

Strategic Direction

Analyst maintains a Buy rating, indicating confidence in SRE's strategic direction.

Negative Factors

Earnings Guidance

SRE's 4Q results came as a surprise to investors with the company lowering its 2025 guidance.

Risk Profile

Higher risk profile in California with the impaired Wildfire Fund after Edison International's Eaton Fire.

Sempra Energy (SRE) vs. S&P 500 (SPY)

Market Cap

$44.37B

Dividend Yield3.68%

Average Volume (3M)6.36M

Price to Earnings (P/E)15.4

Beta (1Y)0.62

Revenue Growth-18.00%

EPS Growth-7.54%

CountryUS

Employees16,773

SectorUtilities

Sector Strength88

IndustryDiversified Utilities

Share Statistics

EPS (TTM)4.42

Shares Outstanding651,913,400

10 Day Avg. Volume5,695,903

30 Day Avg. Volume6,356,994

Financial Highlights & Ratios

PEG Ratio3.62

Price to Book (P/B)N/A

Price to Sales (P/S)3.44

Price to Cash Flow (P/CF)8.30

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$80.67

Price Target Upside20.58% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering15

Sempra Energy Business Overview & Revenue Model

Company DescriptionSempra operates as an energy-services holding company in the United States and internationally. The company's San Diego Gas & Electric Company segment provides electric services; and supplies natural gas. It offers electric services to approximately 3.6 million population and natural gas services to approximately 3.3 million population that covers 4,100 square miles. Its Southern California Gas Company segment owns and operates a natural gas distribution, transmission, and storage system that supplies natural gas to a population of approximately 22 million covering an area of 24,000 square miles. The company's Sempra Texas Utilities segment engages in the regulated transmission and distribution of electricity serving 3.8 million homes and businesses, and operation of 140,000 miles of transmission and distribution lines. Its transmission system includes 18,249 circuit miles of transmission lines, a total of 1,174 transmission and distribution substations, and interconnection to 130 third-party generation facilities totaling 45,403 megawatts. The company was formerly known as Sempra Energy and changed its name to Sempra in July 2021. Sempra was founded in 1998 and is headquartered in San Diego, California.

How the Company Makes MoneySempra Energy generates revenue primarily through its utility operations in California and Texas. The company earns money by providing electricity and natural gas services to millions of customers, charging them for the energy consumed. Sempra's regulated utilities, SDG&E and SoCalGas, derive income from fixed charges and usage-based rates approved by regulatory bodies. Additional revenue streams include infrastructure investments and the development of renewable energy projects. Sempra's joint ventures and partnerships, such as its stake in Oncor Electric Delivery Company, also contribute to its earnings by expanding its market reach and enhancing operational efficiencies.

Sempra Energy Financial Statement Overview

Summary

Sempra Energy demonstrates strong profitability and efficient operations but faces challenges in revenue growth consistency and cash flow management. Solid returns on equity and effective cost controls are notable strengths. Attention to cash flow stability and revenue growth trajectory is recommended to enhance financial health.

Income Statement

Positive

Sempra Energy shows a strong net profit margin due to substantial net income growth. Gross profit margin remains healthy, indicating efficient cost management. However, the revenue growth rate is inconsistent, with a recent decline. EBIT and EBITDA margins are strong, indicating efficient core operations despite a recent drop in EBITDA.

Balance Sheet

Positive

The balance sheet displays a moderate debt-to-equity ratio, suggesting manageable leverage levels. Return on Equity (ROE) is strong, indicative of effective use of equity to generate profits. The equity ratio is moderate, reflecting a balanced approach to financing through equity and liabilities.

Cash Flow

Positive

Operating cash flow is robust, supporting net income well. However, free cash flow growth is concerning due to significant capital expenditures. The free cash flow to net income ratio indicates effective cash generation relative to earnings, but recent free cash flow figures are negative, highlighting potential cash management challenges.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
13.19B	16.72B	14.44B	12.86B	11.37B
	Gross Profit
6.72B	5.94B	5.21B	5.30B	5.04B
	EBIT
2.23B	5.84B	2.66B	2.98B	2.88B
	EBITDA
5.60B	6.12B	4.52B	4.63B	4.23B
	Net Income Common Stockholders
3.50B	3.08B	787.00M	120.00M	1.24B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.42B	236.00M	370.00M	559.00M	960.00M
	Total Assets
45.28B	87.18B	78.57B	72.05B	66.62B
	Total Debt
12.44B	31.75B	28.92B	24.64B	24.21B
	Net Debt
11.02B	31.46B	28.55B	24.09B	23.25B
	Total Liabilities
19.92B	53.53B	49.32B	44.63B	41.69B
	Stockholders Equity
25.36B	28.70B	27.14B	26.00B	23.39B
Cash Flow		Free Cash Flow
4.91B	-2.18B	-4.21B	-1.17B	-2.08B
	Operating Cash Flow
4.91B	6.22B	1.14B	3.84B	2.59B
	Investing Cash Flow
-9.12B	-8.72B	-5.04B	-5.51B	553.00M
	Financing Cash Flow
5.42B	2.42B	3.78B	1.26B	-2.37B

Sempra Energy Technical Analysis

Technical Analysis Sentiment

Negative

Last Price66.90

Price Trends

50DMA

74.04

Negative

100DMA

80.30

Negative

200DMA

80.01

Negative

Market Momentum

MACD

-1.40

Negative

RSI

48.22

Neutral

STOCH

74.54

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SRE, the sentiment is Negative. The current price of 66.9 is below the 20-day moving average (MA) of 69.25, below the 50-day MA of 74.04, and below the 200-day MA of 80.01, indicating a bearish trend. The MACD of -1.40 indicates Negative momentum. The RSI at 48.22 is Neutral, neither overbought nor oversold. The STOCH value of 74.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SRE.

Sempra Energy Risk Analysis

Sempra Energy disclosed 46 risk factors in its most recent earnings report. Sempra Energy reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Sempra Energy Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CIG	80 Outperform	$5.68B	3.66	28.91%	11.33%	3.39%	46.79%
ELP	77 Outperform	$5.20B	2.29	9.47%	3.02%	-4.45%	―
BKH	72 Outperform	$4.18B	14.84	8.13%	4.53%	-8.73%	0.14%
Sector *	65 Neutral	$11.76B	15.57	6.23%	4.62%	5.52%	-8.96%
SRE	64 Neutral	$44.37B	15.41	9.55%	3.68%	-18.00%	-7.54%
AES	59 Neutral	$7.93B	4.71	39.65%	6.22%	-3.14%	563.59%
BIP	54 Neutral	$19.14B	2,718.52	0.96%	5.60%	17.33%	-92.62%

* Utilities Sector Average

Performance Comparison

SRE

Sempra Energy

66.90

0.35

0.53%

BKH

Black Hills

58.25

8.29

16.59%

BIP

Brookfield Infrastructure

27.48

2.94

11.98%

CIG

Companhia Energetica Minas Gerais

1.67

-0.02

-1.18%

ELP

Companhia Paranaense de Energia Pfd

7.20

0.20

2.86%

AES

10.30

-5.80

-36.02%

Sempra Energy Earnings Call Summary

Earnings Call Date: Feb 25, 2025 | % Change Since: -22.56% | Next Earnings Date: May 1, 2025

Earnings Call Sentiment Neutral

The earnings call reflected a mixed outlook. While Sempra announced strong long-term growth expectations and a substantial capital investment plan, near-term challenges such as lowered 2025 EPS guidance, regulatory hurdles, and project delays were highlighted. Despite these challenges, the focus on strategic investments and growth opportunities, particularly in Texas, suggests a positive long-term trajectory.

Highlights

EPS Growth Forecast Increase

Sempra has raised its projected long-term EPS growth rate to 7% to 9%, with expectations to achieve 9% or higher growth between 2025 and 2029.

Record Capital Plan

Sempra announced a new record capital plan of $56 billion for 2025-2029, representing a 16% increase over the prior plan, with a significant focus on investments in Texas.

Dividend Increase

Sempra's board of directors approved an increase in the company's annualized dividend for the fifteenth consecutive year to $2.58 per share.

Oncor's Strong Growth

Oncor reported a record $4.7 billion capital deployment and a 15% rate base growth. The company is preparing for a comprehensive base rate review, expected to strengthen its financial position.

Sempra Infrastructure Progress

Significant progress on dual-basin LNG strategy, with ECA LNG Phase 1 and Port Arthur LNG Phase 1 on budget and on schedule, and Port Arthur LNG Phase 2 targeting FID in 2025.

Lowlights

Lowered 2025 EPS Guidance

Sempra revised its full-year 2025 EPS guidance range to $4.30 to $4.70, below prior expectations, due to changes in California rate cases, interest rates, commodity prices, and O&M costs.

California Rate Case Challenges

The final decision on California GRC was less favorable than expected, impacting financial forecasts. This included a 42 basis point decrease in authorized ROE.

Oncor's Regulatory Lag

Oncor's regulatory lag and higher costs have pressured its earned ROE, leading to the decision to file a base rate review earlier than planned, affecting near-term earnings.

FERC Decision Impact

FERC issued an order finding SDG&E ineligible for a 50 basis point ISO adder, negatively impacting anticipated returns.

Delayed ECA LNG Phase 1 COD

ECA LNG Phase 1's commercial operation date was delayed to spring 2026, impacting financial projections for 2025.

Company Guidance

In Sempra's fourth quarter 2024 earnings call, the company provided a detailed financial overview, highlighting an adjusted EPS of $4.65, slightly below the midpoint of their guidance range. For 2025, the EPS guidance was adjusted to $4.30 to $4.70, reflecting factors such as California rate case decisions and updates in interest rates, commodity prices, and O&M costs. Oncor, a critical growth driver, is preparing for a base rate review to support Texas's rapid economic expansion, which saw over half a million new residents. The company announced a five-year capital plan of $56 billion, with a significant portion allocated to Oncor, anticipating a 7% to 9% long-term EPS growth rate. Additionally, Sempra's board approved an annualized dividend increase to $2.58 per share. Looking ahead, Sempra set a 2026 EPS guidance range of $4.80 to $5.30, driven by capital investments and infrastructure projects, targeting a compound annual rate-based growth of 10%.

Sempra Energy Corporate Events

Executive/Board Changes

Sempra Energy Appoints New Board Members

Neutral

Feb 10, 2025

On February 8, 2025, Sempra Energy announced the appointment of two new members to its Board of Directors, Anya Weaving and Kevin C. Sagara. The appointments will be effective on March 1, 2025. Ms. Weaving will serve on the Audit and Compensation and Talent Development Committees and has been affirmed as an independent director and audit committee financial expert, while Mr. Sagara, who retired as Executive Vice President and Group President of Sempra in December 2023, will join the Safety, Sustainability and Technology Committee but is not considered independent due to his recent executive role.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.