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Sempra Energy (SRE) Tops on Q4 Earnings, Issues '18 EPS View

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Sempra Energy’s (SRE - Free Report) fourth-quarter 2017 adjusted earnings per share (EPS) of $1.54 surpassed the Zacks Consensus Estimate of $1.40 by 10%. Earnings rose 1.3% from the prior-year quarter figure of $1.52.

Barring the one-time adjustments, the company reported GAAP loss of $1.99 per share in the quarter, as against earnings of $1.51 in the prior-year quarter.

 

Sempra Energy Price, Consensus and EPS Surprise

 

Sempra Energy Price, Consensus and EPS Surprise | Sempra Energy Quote

 

In 2017, the company reported adjusted EPS of $5.42 that surpassed the Zacks Consensus Estimate of $5.26. Earnings rose 7.3% from the prior-year figure of $5.05.

Total Revenues

In the quarter under review, total revenues were $2,964 million, up 3.3% year over year on higher contributions from both the energy-related businesses (up 16.5%) and utilities (1.7%). However, total revenues missed the consensus mark of $3,126 million by 5.2%.

In 2017, the company generated revenues worth $11.21 billion, which surpassed the Zacks Consensus Estimate of $11.09 billion. On a year-over-year basis, revenues rose 10.1%.

Segment Update

San DiegoGas & Electric (SDG&E): Quarterly earnings for this segment were $131 million compared with the year-ago period figure of $151 million. The decline stemmed from an income-tax expense related to the Tax Cuts and Jobs Act of 2017.

Southern California Gas Company (SoCalGas): The segment registered earnings of $128 million in the fourth quarter compared with $151 million in the year-ago quarter.

Sempra South American Utilities: The segment recorded earnings of $52 million in the fourth quarter, up from $29 million in the prior-year quarter. The decrease can be attributed to a $17-million charge related to Peruvian tax reform in 2016.

Sempra Mexico: The segment reported earnings of $64 million, compared with $56 million recorded in the prior-year quarter. This is driven by favorable currency exchange rate and inflation effects.

Sempra Renewables: The segment recorded quarterly earnings of $203 million, up from $12 million in the prior-year quarter.

Sempra LNG & Midstream: The segment generated earnings of $126 million against the year-ago quarter’s loss of $3 million. The upside was driven by a non-cash income-tax benefit related to the Tax Cuts and Jobs Act of 2017.

Financial Update

As of Dec 31, 2017, Sempra Energy’s cash and cash equivalents were $288 million, compared with $349 million as of Dec 31, 2016.

Long-term debt was $16,445 million as of Dec 31, 2017 compared with $14,429 million at 2016 end.

Cash flow from operating activities was $3,625 million at the end of 2017, up from $2,311 million at 2016-end.

In 2017, the company’s capital expenditures, investments and acquisition of businesses worth $4,219 million compared with $5,718 million in the prior-year period.

Guidance

Sempra Energy issued 2018 earnings per share guidance. The company currently expects to generate earnings in the band of $5.30 to $5.80.

Zacks Rank & Key Pick

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

A better-ranked stock in the space is NewJersey Resources (NJR - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NewJersey Resources delivered a positive earnings surprise of 164.41% in fourth-quarter 2017. It currently boasts a solid long-term earnings growth rate of 6%.

Recent Peer Releases

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

PG&E Corporation’s (PCG - Free Report) adjusted operating earnings per share of 63 cents in fourth-quarter 2017 missed the Zacks Consensus Estimate of 69 cents by 8.7%.

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