Incorporated in 1996, San Diego-based Sempra (SRE) is a trailblazer in energy infrastructure, lighting up lives and powering innovation for 40 million consumers globally. With a market cap of $48 billion, its Sempra California segment lights up San Diego with electric services and natural gas for millions across 4,100 square miles; the Sempra Texas segment manages 18,298 miles of power lines, 1,257 substations and connections to 173 power plants, serving millions of delivery points; and the Sempra Infrastructure segment drives energy transition projects in North America and beyond.
Shares of Sempra have lagged behind the broader market over the past 52 weeks. SRE has surged by 4.1% over this time frame, while the broader S&P 500 Index ($SPX) rallied 28.9%. In 2024, SRE stock rose 1.5%, compared to SPX's 11.2% gains on a YTD basis.
Zooming in further, SRE also underperforms the Utilities ETF Vanguard’s (VPU) 8.7% gains over the past 52 weeks.
SRE’s underperformance relative to the broader market over the past year could be attributed to its declining profits in 2023, regulatory hurdles, supply chain disruptions, and heightened competition.
However, after reporting its Q1 earnings results on May 7, shares of Sempra surged. Jeffrey W. Martin, Sempra's chairman and CEO, emphasized the company's robust presence in key markets amid growing interest in renewables, electric vehicles, and digital infrastructure. He said, “Our infrastructure-centered strategy has us well positioned to continue modernizing and expanding the energy grid to help meet the needs of our customers." This resonated positively with investors, boosting sentiment toward the company.
For the current fiscal year, ending in December, analysts expect Sempra's EPS to grow by 4.6% to $4.82. The company's earnings surprise history is mixed. It beat or matched consensus estimates in three of the last four quarters while missing on one other occasion.
Among the 16 analysts covering the stock, the consensus rating is a “Strong Buy.” That’s based on 11 “Strong Buys,” one “Moderate Buy,” and four “Holds.”
This configuration has been consistent over the past months. However, it is slightly less bullish than two months before, with 12 “Strong Buy” ratings.
On May 17, Mizuho's Anthony Crowdell raised Sempra's price target to $86, while affirming a “Strong Buy” rating. Crowdell noted significant valuation gaps and favorable California regulations as drivers for the move, emphasizing Sempra's resilience in a challenging earnings cycle.
The mean price target of $84.50 suggests a premium of just 11.4% to SRE's current levels. The Street-high price target of $94 represents an upside potential of 23.9% from SRE's current levels.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
