Sempra (SRE) Up 4.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Sempra (SRE). Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sempra due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Sempra Energy Beats on Q4 Earnings, Revenues Up Y/Y
Sempra Energy’s fourth-quarter 2018 adjusted earnings per share (EPS) came in at $1.56, beating the Zacks Consensus Estimate of $1.47 by 6.1%. The bottom line also improved 1.3% from $1.54 registered in the prior-year quarter.
Barring one-time items, the company generated GAAP earnings of $3.03 per share, against a loss of $1.99 in fourth-quarter 2017. This year- over-year upside was driven by solid top-line performance.
For 2018, Sempra Energy’s operating EPS came in at $5.57, up 2.8% from the prior-year quarter’s $5.42. The figure also surpassed the Zacks Consensus Estimate of $5.46 by 2%.
In the quarter under review, total revenues were $3,221 million, up 8.7% year over year on higher contributions from both its Utilities (up 7.5%) and energy-related businesses (up 17.5%). The top line also surpassed the consensus mark of $3,183 million by 1.2%.
For 2018, Sempra Energy’s revenues were $11,687 million, up 4.3% from the prior-year figure of $11,207 million. The figure surpassed the Zacks Consensus Estimate of $11,480 million by 1.8%.
San Diego Gas & Electric (SDG&E): Quarterly earnings amounted to $148 million compared with the year-ago quarter’s $131 million.
Southern California Gas Company (SoCalGas): The segment quarterly earnings amounted to $156 million in the fourth quarter of 2018 compared with earnings of $128 million in the prior-year quarter.
Sempra Texas Utility: This segment registered earnings of $88 million in the reported quarter.
Sempra South American Utilities: The segment recorded earnings of $59 million, up from $52 million in fourth-quarter 2017.
Sempra Mexico: The segment recorded net earnings of $76 million compared with $64 million in the year-ago quarter.
Sempra Renewables: The segment recorded net quarterly earnings of $382 million, compared with $203 million in the fourth quarter last year.
Sempra LNG & Midstream: The segment reported earnings of $147 million compared with the year-ago quarter’s $126 million.
Parent and Other: Quarterly loss declined to $192 million from the year-ago quarter’s loss of $1,205 million.
As of Dec 31, 2018, Sempra Energy’s cash and cash equivalents totaled $190 million compared with $288 million as of Dec 31, 2017.
Long-term debt amounted to $21,661 million as of Dec 31, 2018, compared with $16,445 million at 2017 end.
Cash flow from operating activities was $3,447 million at the end of 2018, down from $3,625 million at the end of the prior year.
In 2018, the company’s capital expenditures, investments and acquisitions summed $14,160 million compared with $4,219 million in 2017.
Highlight of the Quarter
Sempra Energy announced several LNG agreements with commercial parties in the fourth quarter 2018, with respect to the company's LNG facilities in development: Port Arthur LNG in Jefferson County, TX; Cameron LNG Phase 2 in Hackberry, La.; and Energía Costa Azul LNG Phases 1 and 2 in Mexico. The agreements support Sempra Energy's goal to become one of the largest U.S. exporters of LNG, targeting the export of 45 million tons per annum to global markets.
Sempra Energy issued 2019 earnings per share guidance. The company currently expects to generate earnings of $5.70-$6.30. The Zacks Consensus Estimate for 2019 earnings currently stands at $6.03 per share, which exceeds the mid-point of the company provided guidance.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted -9.32% due to these changes.
At this time, Sempra has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Sempra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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