With a market cap of $50.2 billion, Sempra (SRE) is an energy infrastructure company involved in the distribution, storage, and transportation of electricity and natural gas. The California-based company operates through two primary groups: Sempra Utilities and Sempra Infrastructure, across its three operational segments.
Shares of this utility company have underperformed the broader market over the past 52 weeks. SRE has gained 13.8% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 24.9%. In 2024, shares of SRE are up 6.6%, compared to SPX’s 16.2% gain on a YTD basis.
Zooming in further, SRE has lagged behind the Virtus Reaves Utilities ETF’s (UTES) 25% gain over the past 52 weeks and 23.4% returns on a YTD basis.
Sempra has underperformed due to higher interest expenses, increased taxes, and sluggish stock performance amidst rising rates. Moreover, the stock fell 2.1% on Aug. 6, after its Q2 earnings release, which fell short of Wall Street’s top and bottom-line estimates. This was due to lower-than-expected revenue from its California segment driven by weaker demand for its electric and gas utility.
For the current fiscal year, ending in December, analysts expect SRE’s EPS to grow 3.9% year over year to $4.79. The company’s earnings surprise history is mixed. It beat or met the consensus estimates in two of the last four quarters while missing on two other occasions.
Among the 15 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings, one “Moderate Buy,” and four “Holds.”
The configuration is slightly less bullish than three months ago, with 11 analysts suggesting a “Strong Buy.”
On Aug. 9, BMO Capital Markets maintained an “Outperform” rating on Sempra and raised the price target to $90, noting the company’s potential for regulated growth due to a series of positive developments expected by the end of 2024.
The mean price target of $84.25 represents a premium of 5.7% to SRE’s current levels. The street-high price target of $94, implies a potential upside of almost 18% from the current price
On the date of publication, Sohini Mondal 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.
