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Sempra Energy to Gain From Investments Amid Operational Risks

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We have recently issued an updated research report on Sempra Energy (SRE - Free Report) . The company’s third-quarter 2018 adjusted earnings per share (EPS) came in at $1.23, beating the Zacks Consensus Estimate of $1.13 by 8.8%.

Total revenues registered a 9.7% year-over-year growth on higher contributions from its Utilities and energy-related businesses.

Moving ahead, systematic investments in its infrastructure development projects are likely to fortify Sempra Energy’s position in the Utility space. For the 2018-2020 period, the company expects to incur capital expenditures and investments of approximately $15.2 billion. 

Factors Influencing the Stock

In March 2018, Sempra Energy completed the acquisition of Oncor Electric Delivery Company, LLC (‘’Oncor’’) for $9.5 billion in cash. Following the deal, Texas’ largest electric transmission and distribution provider was added to Sempra Energy’s portfolio.

In a bid to expand and reinforce its transmission and distribution network, Sempra Energy has decided to support Oncor's plan of investing capital worth $10.5 billion for a five-year period. This, in turn, will enhance the service territory of Sempra Energy, expanding its opportunities to earn more profit.

Sempra Energy Price and Consensus

Sempra Energy Price and Consensus | Sempra Energy Quote

In June 2018, Sempra Energy announced its plans to sell the company's entire U.S. wind and solar asset portfolio along with some of its midstream assets. This plan was backed by the Sempra Energy’s attempt to transform itself into a leading energy company. In line with this, during the third quarter, Sempra Renewables agreed to sell all of its U.S. operating solar assets, one U.S. wind generation facility, and its solar and battery storage development projects to a subsidiary of Consolidated Edison for $1.54 billion.

On the flip side, Sempra Energy’s operations are subject to risks associated with breakdown or failure of equipment or processes due to fuel supply or transportation disruptions, natural calamities and accidents. The Aliso Canyon gas leak is a classic example of that for which the company has been incurring substantial costs lately.

Zacks Rank & Stocks to Consider

Sempra Energy currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same sector are Ameren Corporation (AEE - Free Report) , Entergy Corporation (ETR - Free Report) and CMS Energy Corporation (CMS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren delivered average positive earnings surprise of 15.40% in the last four quarters. The Zacks Consensus Estimate for current-year earnings has been revised 5% upward to $3.37 over the past 90 days.

Entergy Corporation delivered average earnings surprise of 36.20% over the trailing four quarters. The Zacks Consensus Estimate for 2018 earnings has been raised 11.3% to $6.98 over the past 90 days.

CMS Corporation came up with average beat of 6.37% in the preceding four quarters. The Zacks Consensus Estimate for the current-year bottom line has remained unchanged over the past 90 days.

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