Earnings Preview: What to Expect From Sempra's Report

San Diego, California-based Sempra (SRE) is an energy services company involved in the sale, distribution, storage, and transportation of electricity and natural gas. With a market cap of around $54 billion, it operates through Sempra California, Sempra Texas Utilities, and Sempra Infrastructure segments. The company is expected to release its Q3 earnings on Friday, Nov. 1.

Ahead of the event, analysts expect Sempra to report a profit of $1.11 per share, up 2.8% from $1.08 per share reported in the year-ago quarter. The company has surpassed or met Wall Street's bottom-line estimates in two of the past four quarters while missing on two other occasions. Its adjusted EPS for the last reported quarter dipped 5.3% year-over-year to $0.89, missing the consensus estimates by 3.3%.

For fiscal 2024, analysts expect Sempra to report an adjusted EPS of $4.79, up 3.9% from $4.61 in fiscal 2023. In fiscal 2025, its adjusted EPS is expected to grow 7.1% year-over-year to $5.13.

SRE has gained 14.6% on a YTD basis, lagging behind the S&P 500 Index’s ($SPX) 22.5% gains and the Utilities Select Sector SPDR Fund’s (XLU) 29.8% returns during the same time frame.

Shares of Sempra dipped 2.1% after the release of its disappointing Q2 earnings on Aug. 6. Its total revenue fell 9.7% year-over-year to $3 billion, due to a 10% decline in natural gas sales to $1.5 billion and a staggering 39.9% decline in energy-related businesses’ revenues to $373 million. While net income increased due to a $130 million tax benefit and higher equity earnings, the company's operating margin contracted by 5.5% to 10.2%, leading to a sharp 41.1% decline in operating income to $308 million.

However, the consensus opinion on SRE stock is bullish, with an overall “Strong Buy” rating. Out of the 17 analysts covering the stock, 12 recommend “Strong Buy,” one advises “Moderate Buy,” and four suggest “Hold” rating. The mean price target of $90.14 represents a potential upside of 5.2% from current price levels.

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On the date of publication, Aditya Sarawgi 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.

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