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Sempra Energy (SRE) Rides on Investments and Strong Demand

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Sempra Energy (SRE - Free Report) benefits from systematic investments that will enhance the reliability of its operations, which will allow it to meet the rising demand from an expanding customer base. The company is also expanding its LNG operation and will be among the leading LNG exporters in the United States.

However, this Zacks Rank #3 (Hold) company faces risks like project development disruptions, power outages and property damages, which act as a headwind.


Sempra has a capital investment plan of $40.4 billion for 2024-2028 to strengthen its infrastructure and enable the company to serve its customers more efficiently. This plan comprises an investment of $21.4 billion in Sempra California, $12.9 billion in Sempra Infrastructure and $3.4 billion in Sempra Texas Utilities.

The company plans to invest $9.20 billion in 2024, the majority of which will go toward building the PA LNG Phase 1 project, the ECA LNG Phase 1 project and natural gas pipelines at Sempra Infrastructure, in addition to transmission and distribution upgrades at its regulated public utilities. SRE expects this systematic investment to drive rate base growth of 9% annually during the 2024-2028 period.

As a clean-burning alternative to coal, the worldwide demand for natural gas is high. Sempra Energy is well-positioned with strategically located opportunities in North America as the demand for liquid natural gas (LNG) continues to rise globally. The LNG business line of Sempra Infrastructure is still committed to safely supplying natural gas to all regions of the world to aid in the energy transition.

Utility service providers like Sempra Energy are working harder to increase the amount of renewable energy in their portfolio to qualify for the utility-scale renewable energy market's financial and environmental, social and governance (ESG) incentives as more industries choose clean energy as their preferred energy source.


Investors may be concerned about the company's comparative study of its trailing 12-month Enterprise Value/Sales (EV/Sales) ratio, which paints a somewhat dismal image. The stock reportedly has a trailing 12-month EV/Sales ratio of 5.54, which is greater than the 3.98 EV/sales ratio for the industry for the previous year. Additionally, Sempra Energy's trailing 12-month EV/Sales ratio was greater than its one-year range median of 4.59.

The infrastructure and facilities of SRE, including ongoing and planned projects, are vulnerable to inclement weather, natural disasters, accidents and explosions. These events may cause power outages, disrupt project development and cause property damage to the company. Any of these events have the potential to significantly raise costs, such as those associated with upkeep or restoration, which would have an effect on the business's earnings and revenues.

Stocks to Consider

Some better-ranked stocks from the same sector are Atmos Energy Corp. (ATO - Free Report) , DTE Energy (DTE - Free Report) and MDU Resources Group (MDU - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Atmos Energy Corp’s long-term (three to five years) earnings growth rate is 7%. The Zacks Consensus Estimate for ATO’s fiscal 2024 EPS indicates an increase of 10.12% from the previous year’s reported number.

DTE Energy’s long-term earnings growth rate is 8.2%. The Zacks Consensus Estimate for DTE’s 2024 EPS implies an improvement of 16.93% from that recorded in 2023.

MDU Resources Group’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for MDU’s 2024 EPS implies an improvement of 3.33% from the previous year’s reported number.


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