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Sempra Energy (SRE) to Post Q4 Earnings: What's in Store?

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Sempra Energy (SRE - Free Report) is set to report fourth-quarter 2017 results on Feb 27, before the market opens.

Last quarter, the company posted in-line earnings. On a bright note, it surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 13.49%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Last September and October, Sempra Energy entered into membership interest purchase agreements with financial institutions to form tax equity limited liability companies that include a wind power generation project located in Huron County, MI, and a solar power generation project near Fresno, CA. The company expects to gain cash proceeds of $270-$300 million in the period from the fourth quarter of 2017 to the second quarter of 2018. We believe part of this cash will boost the upcoming quarterly results.

However, the Aliso Canyon gas leak event led to an estimated loss of $841 million at the end of the third quarter, wider than the prior-quarter loss. These costs may rise considerably, which in turn will adversely the company’s quarterly earnings.

The Zacks Consensus Estimate for Sempra Energy’s fourth-quarter revenues is pegged at $3.13 billion, displaying an 8.9% annual gain. The same for earnings stands at $1.40, reflecting a year-over-year decline of 7.9%.

Earnings Whisper

Our proven model does not conclusively show an earnings beat for Sempra Energy this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, Sempra Energy lacks both the attributes, as you will see below:

Zacks ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Sempra Energy carries a Zacks Rank #4 (Sell).

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Sempra Energy Price and EPS Surprise

Sempra Energy Price and EPS Surprise | Sempra Energy Quote

Stocks That Warrant a Look

Here are a few utility stocks which have the right combination of elements to post an earnings beat this quarter:

Public Service Enterprise Group (PEG - Free Report) will report fourth-quarter results on Feb 23. The company has an Earnings ESP of +1.92% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pinnacle West Capital (PNW - Free Report) is slated to report fourth-quarter results on Feb 23. The company has an Earnings ESP of +12.20% and a Zacks Rank #3.

Recent Peer Release

Duke Energy (DUK - Free Report) reported fourth-quarter 2017 adjusted earnings per share of 94 cents, beating the Zacks Consensus Estimate of 91 cents by 3.3%.

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