Sempra Energy Doubled Sine 2011 Low
Sempra Energy's stock has more than doubled since an August 2011 low and was resting Tuesday near an all-time high.
That's pretty good for a public utility that pays a dividend, too.
San Diego-basedSempra ( SRE ) provides electricity and natural gas to 31 million customers around the U.S. and in Latin America. It was formed in 1998 from the merger of San Diego Gas & Electric and Southern California Gas.
Public utilities such as Sempra are regulated monopolies whose rates are set by state agencies, like the California Public Utilities Commission.
So, there's not much wiggle room for run-away profit growth. The Utility-Diversified industry group is currently ranked No. 184 out of 197 tracked by IBD, hardly up there with biotech and Internet stocks.
Sempra pays a quarterly dividend of 63 cents a share, which works out to a 2.8% annual yield.
It expects to take a loss from the closure earlier this year of the San Onofre Nuclear Power Generating Station. The nuclear power plant near the coastal town of San Clemente is a familiar sight to motorists traveling between Los Angeles and San Diego. It's nearly 80% owned by Southern California Edison and 20% by San Diego Gas & Electric.
The company is looking for new profitable ventures. Earlier this year, it signed an agreement to build and operate a liquified natural gas export facility near Hackberry, La.
Earnings growth tends to be slow. Its five-year EPS growth rate is 2%. In the most recent quarter, earnings grew 6% and analysts are expecting a 7% drop in the next report, due Nov. 5.
Analysts are forecasting a 3% EPS increase this year and a 1% increase next year.
After-tax margins have been running at a fairly steady rate, sometimes above 10% and sometimes below it. The return on equity also runs around 10%.