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Sempra Energy (SRE) Q2 Earnings: Is a Beat in the Offing?

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Sempra Energy (SRE - Free Report) is set to report second-quarter 2018 results on Aug 6, before the market opens.

In the last reported quarter, the company reported a negative earnings surprise of 14.37%. However, it surpassed the Zacks Consensus Estimate for earnings in two of the trailing four quarters, the average beat being 8.28%.

Let’s see how things are shaping up prior to this announcement.

Why a Likely Positive Surprise?

Our proven model shows that Sempra Energy is likely to beat estimates this quarter. That is because it has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Sempra Energy has an Earnings ESP of +0.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3, which along with a positive Earnings ESP indicates a positive surprise.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into earnings announcements.

Sempra Energy Price and EPS Surprise

Sempra Energy Price and EPS Surprise | Sempra Energy Quote

Factors at Play

In the first quarter, Sempra Energy completed its $9.45-billion acquisition of an approximate 80% ownership interest in Oncor. Management expects the buyout to be accretive to Sempra Energy’s earnings for the remaining three quarters of 2018 by $320 million to $360 million.

To this end, we may expect this accretion to benefit the company’s bottom line in the second quarter as well, which is attributable to the company’s equity earnings since March itself. This, in turn, is likely to be reflected in the upcoming quarterly results.

In line with this, the Zacks Consensus Estimate for earnings pegged at $1.17 reflects a year-over-year improvement of 6.4%.

Meanwhile, from the perspective of its top line, the Zacks Consensus Estimate for the company’s second-quarter revenues is pegged at $2.71 billion, indicating an increase of 6.9% year over year.

Other Stocks That Warrant a Look

Here are some other companies from the Utility sector you may want to consider, as our model shows that these too have the right combination of elements to post earnings beat this quarter:

Southwest Gas Corporation (SWX - Free Report) has an Earnings ESP of +4.84% and a Zacks Rank #2. It is expected to report second-quarter results on Aug 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ameren Corporation (AEE - Free Report) has an Earnings ESP of +1.69% and a Zacks Rank #2. It is slated to report second-quarter results on Aug 3.

Recent Utility Release

Public Service Enterprise Group (PEG - Free Report) or PSEG reported second-quarter 2018 adjusted operating earnings of 64 cents per share, which exceeded the Zacks Consensus Estimate of 62 cents by 3.2%.

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