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Sempra Energy (SRE - Analyst Report) is expected to release its third-quarter 2012 results on November 6, 2012. The Zacks Consensus Estimate for the third quarter of 2012 is $1.00 per share (significant year-over-year decrease of 18.03%) on revenues of $2,317 million (year-over-year decrease of 10.1%).

Second-quarter 2012, a Synopsis

Sempra Energy reported its second-quarter 2012 results with pro forma earnings per share of 98 cents, beating the Zacks Consensus Estimate of 80 cents and the year-ago figure of 94 cents. Total revenue of Sempra Energy in the second quarter of 2012 was $2.1 billion, down 13.7% year over year and also below the Zacks Consensus Estimate of $215 million.

In the quarter, Sempra Utilities' top line decreased to $1.83 billion from $1.92 billion in the year-ago quarter. Energy-related businesses generated revenues of $251 million compared with $500 million in the year-ago quarter.

Guidance

Sempra Energy reaffirmed its fiscal 2012 pro forma earnings guidance range of $4 to $4.30 per share. However, including the pipeline charge of 73 cents and a tax benefit of 19 cents per share, the company’s GAAP earnings per share were in the range of $3.46 to $3.76 per share.

Read our full coverage on this earnings report: Sempra Beats EPS, Sales Trail

Zacks Consensus                   

The analysts covered by Zacks expects Sempra to post third-quarter 2012 earnings of $1.00 per share, lower than $1.22 delivered in the prior-year quarter. Currently, the Zacks Consensus Estimate ranges between earnings of 98 cents and $1.01 a share.

For 2012, the Zacks Consensus Estimate stood at $4.19 per share, as compared to $4.47 per share in the year ago period. The current Zacks Estimate ranges between $4.05 and $4.31 per share.

Estimate Revisions Trend

Agreement

We see hardly any movement in third-quarter 2012. Among the 6 estimates, none of the estimates moved in the upward direction over the last 7 days. However, one moved upward in the last 30 days. Similarly, none of the estimates moved in the opposite direction over the last 7 days while one moved down in the last 30 days.

For full-year 2012, among the 7 estimates, none of the estimates moved in the upward direction over the last 7 days. However, one moved upward in the last 30 days. Similarly, none of the estimates moved in the opposite direction over the last 7 days while two moved down in the last 30 days.

Magnitude

The Zacks Consensus Estimate for the third quarter of 2012 remained static for the last 7 days. However, it inched up by 4 cents to $1.00 per share over the last 30 days. For full-year 2012, the Zacks Consensus Estimate did not show any movement in the last 7 days, while it moved down by 2 cents over the last 30 days.

Surprise History

With respect to earnings surprises, Sempra has topped the Zacks Consensus Estimate in the last four quarters in the range of 0.83% to 22.50%. The average surprise over the last four quarters remained at positive 9.36%. The earnings beat in June 2012 was the highest at 22.50%.

Our Recommendation

Sempra Energy is a southern California-based energy services holding company involved in the sale, distribution, storage, and transportation of electricity and natural gas. The company’s businesses are broadly divided into Sempra Utilities, Sempra International and Sempra U.S. Gas & Power.

Sempra Energy’s diversified basket of businesses insulates its operations to a significant degree from regulatory rate risks. We believe the company presents a lower risk profile relative to its peers like ONEOK Inc. (OKE - Analyst Report). This bullish outlook is supported by stable utility earnings, steady progress at its LNG terminals, renewable power projects in the Pacific Southwest, the Sunrise Powerlink transmission line and ongoing installations of smart meter.

However, we remain concerned due to lack of any near-term positive triggers, along with near-term trepidation in natural gas prices and pending regulatory cases. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

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