With a market cap of $58.4 billion, San Diego, California-based Sempra (SRE) is a leading energy infrastructure company. It focuses on energy distribution, transmission, and infrastructure development across the U.S. and international markets, supporting the energy transition with electricity and natural gas services.
Shares of Sempra have underperformed the broader market over the past 52 weeks. SRE has risen 31.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 35.7%. In 2024, shares of SRE are up 23.4%, compared to SPX’s 25.5% gain on a YTD basis.
However, SRE's performance has remained closely aligned with the Utilities Select Sector SPDR Fund (XLU), which has returned 31.5% over the past 52 weeks and 23.7% YTD.
Despite reporting weaker-than-expected Q3 adjusted EPS of $0.89 and revenue of $2.8 billion, Sempra's shares climbed 7.3% on Nov. 6 due to positive developments that offset weak Q3 earnings. The company announced a $3 billion equity offering, signaling a commitment to growth without excessive debt in a high-interest environment. Its Texas utility, Oncor, revealed a planned increase of 40%-50% to its five-year capital plan to address the rapid growth in energy demand in Texas, particularly from AI and data center sectors, which investors saw as a strategic growth opportunity. Additionally, Sempra reaffirmed both its long-term EPS growth target of 6%-8% and its 2024 EPS guidance of $4.60–$4.90, along with confirming that its Energia Costa Azul LNG project in Mexico remains on schedule for a 2026 launch, all of which reassured investors about its future revenue streams.
For the current fiscal year, ending in December, analysts expect SRE’s EPS to grow 3.5% year-over-year to $4.77. The company’s earnings surprise history is mixed. It met the consensus estimates in one of the last four quarters while missing on three other occasions.
Among the 18 analysts covering the stock, the consensus rating is a “Strong Buy.” That’s based on 13 “Strong Buy” ratings, one “Moderate Buy,” and four Holds.”
This configuration is more bullish than three months ago, with 10 “Strong Buy” ratings on the stock.
On Nov. 11, RBC Capital analyst Shelby Tucker maintained a “Buy” rating on Sempra, setting a price target of $98.
As of writing, SRE is trading below the mean price target of $93.67. The Street-high price target of $102, implies a potential upside of 10.6% from the current price.
