Sempra Confident of 2011 Outlook - Analyst Blog

Sempra Energy ( SRE ) has revised its earnings outlook for fiscal 2011. The company expects pro forma earnings per share ( EPS ) to meet or exceed the higher end of its guidance range of $4 to $4.30 for 2011.

Including a gain of $1.14 from the company's South American utility acquisitions, the company expects GAAP EPS to match or outstrip the higher end of its guidance range of $5.14 to $5.44.

With its third quarter results declared in November this year, the company had set pro forma EPS in the range of $4.00-$4.30 and GAAP EPS in the band of $5.14-$5.44. The company is now confident of meeting or even exceeding the high point of its forecast.

In the third quarter, pro forma earnings were $1.22 per share, a penny above the Zacks Consensus Estimate of $1.21, easily surpassing the year-ago quarterly figure of 53 cents per share. During the quarter, the company had announced that its Sempra Generation, Sempra Pipelines & Storage and Sempra LNG subsidiaries will be consolidated into two new operating units: Sempra International and Sempra U.S. Gas & Power. The restructuring will be effective from January 1, 2012.

Sempra expects to release its fiscal year results on February 28, 2012. The Zacks Consensus Estimates for fourth quarter 2011 and fiscal year 2011 are currently at 98 cents per share and $4.21 per share, respectively.

Recently, in December, Sempra received regulatory approval under which its competitor PG&E Corporation ( PCG ) is eligible to buy renewable power from Sempra's 150 megawatts Copper Mountain Solar 2 project that is located in Boulder City, Nevada.

Sempra Energy appears to be well positioned given a stable stream of earnings through its utility subsidiaries, which cater to more than 20 million customers in central and southern California. The company is also implementing infrastructure improvement programs focused mainly on system reliability, smart grid technology and compliance with California's renewable energy mandate. Other key growth drivers of the company include steady progress at its LNG terminals and the Sunrise Powerlink transmission line.

However, we are concerned about a lack of near-term positive triggers, along with fluctuation in natural gas prices, an ongoing land dispute regarding its LNG terminal in Mexico and pending regulatory cases. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Sempra Energy is a southern California-based energy services holding company involved in the sale, distribution, storage, and transportation of electricity and natural gas.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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