What's in Store for Sempra Energy (SRE) in Q2 Earnings?

Sempra Energy SRE is set to report second-quarter 2020 results on Aug 5, before market open.

In the last-reported quarter, the company delivered an earnings surprise of 32.76%. Moreover, it surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed in one, the average surprise being 11.05%.

Let’s see how things have shaped up prior to this announcement.

Factors to Consider

In the month of April, major parts of the company’s service territories experienced wetter-than-normal temperatures, along with storm activities, which brought record-breaking rainfall. While this weather pattern might have not been much of a demand booster for electricity, in the months of May and June, above-normal-temperature accompanied with drought conditions prevailed.

This must have boosted electricity demand for cooling, which may have aided Sempra Energy’s top line performance in the soon-to-be-reported quarter.

Sempra Energy Price and EPS Surprise

Sempra Energy Price and EPS Surprise

Sempra Energy price-eps-surprise | Sempra Energy Quote

Moreover, favorable rate base outcomes in recent times might have also contributed to the company’s quarterly revenues. The Zacks Consensus Estimate for second-quarter revenues of $2.66 billion suggests a rise of 19.4% from the year-ago quarter’s reported figure.

Alongside the favorable top-line expectation, reduced operating expenses are projected to have driven the company’s bottom line. Moreover, driven by low natural gas prices amid the ongoing crisis situation, the company can be expected to witness higher earnings from Sempra LNG marketing operations. The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.66 per share, implying a 50.9% improvement from the year-ago reported figure.

By the end of June 2020, Sempra Energy completed its business exit from South America, following the sale of its Chilean businesses. The completion of the Chilean transactions concluded Sempra Energy's sales of its South American businesses in both Chile and Peru, resulting in approximately $5.82 billion in combined total cash proceeds. We expect the company’s second-quarter balance sheet to duly reflect these sale proceeds.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Sempra Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But this is not the case here.

Earnings ESP: The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Sempra Energy carries a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are some players from the Utilities sector that have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Pinnacle West Capital Corporation PNW is set to release second-quarter earnings on Aug 6. It has an Earnings ESP of +5.07% and a Zacks Rank #3, presently.

American Water Works Company, Inc. AWK is set to release second-quarter earnings on Aug 5. It has an Earnings ESP of +1.18% and a Zacks Rank of 3, currently.

CenterPoint Energy, Inc. CNP is expected to release second-quarter numbers on Aug 6. It has an Earnings ESP of +7.87% and a Zacks Rank of 3 currently.

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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.

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