We have maintained our Neutral recommendation on
) on Mar 28, 2013 given its focus on infrastructure improvement.
The company currently has a Zacks Rank #2 (Buy).
Why the Reiteration?
Sempra Energy appears to be well positioned given its stable
earnings stream from its utility subsidiaries, which cater to
more than 20 million customers of central and southern
California. Indeed, Sempra's fourth quarter top-line as well as
bottom-line results surpassed the Zacks Consensus Estimates on
the back of significant improvement in execution of its strategy
and fulfillment of financial goals.
Sempra is implementing infrastructure improvement programs
focused mainly on system reliability, smart grid technology and
compliance with California's renewable energy mandate. These
projects and programs include Sunrise Powerlink electric
transmission line, ongoing installations of smart meter,
substation expansions and development of renewable power projects
in the Pacific Southwest.
Other positives in Sempra Energy's story include higher utility
operating margins from regulatory rate hikes, contracts to
construct and own approximately $1 billion of natural gas
pipelines and completion of major regulatory filings for the
Cameron LNG export project.
Moreover, Sempra Energy's diversified basket of businesses
insulates its operations to a large extent from regulatory rate
risks. We believe the company presents a lower risk profile
relative to its peers. Overall, these factors would help Sempra
achieve its 6%-8% earnings growth target.
Despite the many positives running for Sempra, we remain
concerned about the near-term trepidation in natural gas prices
and some pending regulatory cases.
Other Stocks to Consider
Besides Sempra, other stocks worth considering are
The Laclede Group, Inc.
Chesapeake Utilities Corporation
Atmos Energy Corporation
). While The Laclede Group carries a Zacks Rank #1 (Strong Buy),
Chesapeake Utilities and Atmos Energy hold a Zacks Rank #2
ATMOS ENERGY CP (ATO): Free Stock Analysis
CHESAPEAKE UTIL (CPK): Free Stock Analysis
LACLEDE GRP INC (LG): Free Stock Analysis
SEMPRA ENERGY (SRE): Free Stock Analysis
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