Sempra Energy Updates Outlook

Power plant operator, Sempra Energy (SRE - Analyst Report) updated its financial outlook affirming its fiscal 2012 profit forecast above street expectations, and reaffirmed its fiscal 2011 outlook.

Sempra Energy affirmed its fiscal 2012 earnings-per-share in the range of $4.30–$4.60. The Zacks Consensus Estimate for fiscal 2012 currently stands at $4.30. Fiscal 2012 estimate is based upon fiscal 2011 EPS estimate of $4.00 to $4.30. The Zacks Consensus Estimate for fiscal 2011 currently stands at $4.18 per share.

The outlook followed the company’s 6%–8% EPS growth target for the period 2011–2015. Overall the company targets EPS in the range of $5.50–5.80 for fiscal 2015.

Sempra Energy is a southern California-based energy services holding company; involved in the sale, distribution, storage, and transportation of electricity and natural gas. Sempra Pipelines & Storage is an operating subsidiary of Sempra Global and parent business unit. It develops and operates natural gas pipelines and storage facilities in Latin America and the United States, and serves about 2.8 million power and gas customers.

Sempra Energy’s diversified basket of businesses insulates its operations to a significant degree from regulatory rate risks, compared to integrated utility peers. We believe that Sempra Energy presents a lower risk profile relative to its peers, supported by stable utility earnings, steady progress at its LNG terminals and Sunrise Powerlink transmission line, ongoing installation of smart meter and renewable power projects in the Pacific Southwest.

Sempra Energy plans to spend $15 billion over the period 2011–2015 for capital expansion projects focused mainly on its California based utilities, which would keep the growth momentum going.

We have a short-term Zacks #2 Rank (Buy) and a long-term Neutral recommendation on the stock. In the near-term the stock is expected to perform better versus its Zacks #3 Rank (Hold) peers like Delta Natural Gas Co. Inc. (DGAS - Snapshot Report) and UGI Corporation (UGI - Snapshot Report).

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