) is set to report second quarter 2013 results on Aug 6, 2013,
before the earnings bell. Last quarter it posted a 4.90% negative
surprise. Sempra at the moment has a Zacks Rank #3 (Hold). Let's
see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Sempra Energy is a southern California-based energy services
holding company involved in the sale, distribution, storage, and
transportation of electricity and natural gas.
Sempra's first quarter 2013 top- as well as bottom-line results
missed the Zacks Consensus Estimate, in the wake of weak earnings
across its business segments except the Sempra Natural Gas unit.
Again, Sempra's businesses are capital intensive and rely
significantly on long-term debt for its capital expenditures.
Additionally, the company operates in the state of California,
which maintains an aggressive 20%-plus renewable portfolio
standard requirement. The targets are expected to further ramp up
to 33% by 2020. This would entail significant investment towards
renewable energy projects necessitating more funds.
Recently, Sempra lowered the high end of its 2013 guidance range
to $4.30 to $4.60 per share from the earlier range of 4.30 to
$4.80 per share.
For 2014, the company has set its expectation between $4.25 and
$4.55 per share. For 2017, Sempra anticipates earnings of $5.10
to $5.60 per share. However, its earnings guidance through 2017
does not involve any major contribution from its Cameron
liquefied natural gas export project in Louisiana. The project is
not expected to be operational fully until the end of 2018.
Our proven model does not conclusively show that Sempra is likely
to beat earnings this quarter. That is because a stock needs to
have both a positive earnings Expected Surprise Prediction or ESP
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case here as you will see below.
Negative Zacks ESP:
That is because the Most Accurate estimate stands at $1.30, while
the Zacks Consensus Estimate is higher at $1.36. That is a
difference of -4.41%.
Zacks #3 Rank (Hold):
This combined with an ESP of -4.41% makes surprise prediction
difficult. We caution against stocks with Zacks Ranks #4 and 5
(Sell-rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate
Stocks to Consider
Here are some companies to consider as our model shows they
have the right combination of elements to post an earnings beat
MDU RESOURCES (MDU): Free Stock Analysis
NATL FUEL GAS (NFG): Free Stock Analysis
SEMPRA ENERGY (SRE): Free Stock Analysis
QUESTAR (STR): Free Stock Analysis Report
To read this article on Zacks.com click here.
MDU Resources Group Inc.
) has Earnings ESP of 0.00% and carries a Zacks Rank #2 (Buy).
National Fuel Gas Company
) has Earnings ESP of +1.52% and carries a Zacks Rank #2 (Buy).
) has Earnings ESP of 0.00% and carries a Zacks Rank #2