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Sempra (SRE) Down 4.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Sempra (SRE - Free Report) . Shares have lost about 4.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Sempra due for a breakout? 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 catalysts.

Sempra Energy Q2 Earnings Miss, Revenues Improve Y/Y

Sempra Energy’s second-quarter 2020 adjusted earnings per share (EPS) came in at $1.65, which missed the Zacks Consensus Estimate of $1.66 by 0.6%. The bottom line, however, soared 50% from $1.10 reported in the prior-year quarter.

Barring one-time items, the company generated GAAP earnings of $7.61 per share compared with GAAP earnings of $1.26 reported in second-quarter 2019.

Total Revenues

In the quarter under review, total revenues of $2,526 million increased 13.3% year over year on higher contributions from its Utilities (up 17.8%) business. The top line, however, missed the consensus mark of $2,663 million by 5.1%.

Segment Update

San Diego Gas & Electric (SDG&E): Quarterly earnings amounted to $193 million compared with the year-ago quarter’s $143 million.

Southern California Gas Company (SoCalGas): In this segment, earnings totaled $146 million in the second quarter of 2020 compared with $30 million registered in the prior-year quarter.

Sempra Texas Utility: Earnings in this segment came in at $144 million in the reported quarter compared with $113 million in the year-ago quarter.

Sempra Mexico: The segment recorded net earnings of $61 million compared with $73 million in the year-ago quarter.

Sempra LNG: The segment reported earnings of $61 million compared with the year-ago quarter’s $6 million.

Parent and Other: Quarterly loss at this division rose to $141 million from the year-ago quarter’s loss of $127 million.

Financial Update

As of Jun 30, 2020, Sempra Energy’s cash and cash equivalents totaled $4,894 million compared with $108 million as of Dec 31, 2019.

Long-term debt and finance leases amounted to $20,535 million as of Jun 30, 2020, compared with $20,785 million at 2019-end.

Cash flow from operating activities was $1,027 million at the end of second-quarter 2020, down from $1,704 million at the end of second-quarter 2019.

In the reported quarter, the company’s total capital expenditures, investments and acquisitions summed $1,242 million compared with $2,165 million in the second quarter of 2019.

2020 Guidance

Sempra Energy updated its adjusted EPS guidance for 2020. The company expects to generate earnings of $7.20-$7.80 per share. The Zacks Consensus Estimate for full-year earnings stands at $7.54 per share, above the midpoint of the company-projected view.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sempra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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