Send me real-time posts from this site at my email
Zacks

Sempra (SRE) Up 0.9% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Sempra (SRE). Shares have added about 0.9% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sempra due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Sempra Energy Q3 Earnings Miss, Revenues Decline Y/Y

Sempra Energy’s third-quarter 2020 adjusted earnings per share (EPS) came in at $1.31, which missed the Zacks Consensus Estimate of $1.47 by 10.9%. The bottom line also declined 12.7% from $1.50 reported in the prior-year quarter.

Barring one-time items, the company generated GAAP earnings of $1.21 per share compared with GAAP earnings of $2.84 reported in third-quarter 2019.

The year-over-year deterioration can be primarily attributed to lower revenues generated in the reported quarter.

Total Revenues

In the quarter under review, total revenues of $2,644 million decreased 4.1% year over year on lower contributions from both its Utilities (down 4%) and Energy-related businesses (down 4.7%). The top line, however, surpassed the Zacks Consensus Estimate of $2,604 million by 1.5%.

Segment Update

San Diego Gas & Electric (SDG&E): Quarterly earnings amounted to $178 million compared with the year-ago quarter’s $263 million.

Southern California Gas Company (SoCalGas): This segment incurred loss of $24 million in the third quarter of 2020 against earnings of $143 million registered in the prior-year quarter.

Sempra Texas Utility: Earnings in this segment came in at $209 million in the reported quarter compared with $212 million in the year-ago quarter.

Sempra Mexico: The segment recorded net earnings of $50 million compared with $84 million in the year-ago quarter.

Sempra LNG: The segment reported earnings of $71 million compared with the year-ago quarter’s $2 million.

Parent and Other: Quarterly loss at this division declined to $126 million from the year-ago quarter’s loss of $139 million.

Financial Update

As of Sep 30, 2020, Sempra Energy’s cash and cash equivalents totaled $3,515 million compared with $108 million as of Dec 31, 2019.

Long-term debt and finance leases amounted to $21,770 million as of Sep 30, 2020, compared with $20,785 million at 2019-end.

Cash flow from operating activities was $1,629 million at the end of third-quarter 2020, down from $2,118 million at the end of third-quarter 2019.

In the reported quarter, the company’s total capital expenditures, investments and acquisitions were $1,204 million compared with $997 million in the third quarter of 2019.

2020 Guidance

Sempra Energy updated its adjusted EPS guidance for 2020. The company now expects to generate earnings at the high-end of its prior guided range of $7.20-$7.80 per share. The Zacks Consensus Estimate for full-year earnings stands at $7.68 per share, above the midpoint of the company-projected view.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 6.13% due to these changes.

VGM Scores

Currently, Sempra has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Sempra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Sempra Energy (SRE): Free Stock Analysis Report
 
To read this article on Zacks.com click here.

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue