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Why Is Sempra (SRE) Up 1.7% Since Last Earnings Report?

A month has gone by since the last earnings report for Sempra (SRE). Shares have added about 1.7% in that time frame, underperforming 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 catalysts.

Sempra Q1 Earnings Miss Estimates, Revenues Decline Y/Y

Sempra Energy reported first-quarter 2024 adjusted earnings per share (EPS) of $1.34, which missed the Zacks Consensus Estimate of $1.35 by 0.7%. The bottom line also declined 8.2% from $1.46 in the prior-year quarter.

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Including one-time items, the company generated GAAP earnings of $1.26 per share compared with $1.46 in the first quarter of 2023.

Total Revenues

Sempra’s total revenues of $3.64 billion declined 44.5% from $6.66 billion in the year-ago quarter. This was due to lower revenue contributions from the Natural gas and Energy-related business units. The top line also missed the Zacks Consensus Estimate of $6.17 billion by 41%.

Segmental Update

Sempra California: Quarterly earnings amounted to $582 million compared with the year-ago quarter’s level of $618 million.

Sempra Texas Utility: Earnings in this segment improved from $83 million in the year-ago quarter to $183 million.

Sempra Infrastructure: The segment recorded earnings of $131 million compared with $315 million in the year-ago quarter.

Parent and Other: The segment reported a loss of $95 million, wider than the prior-year period’s reported loss of $47 million.

Financial Update

As of Mar 31, 2024, Sempra’s cash and cash equivalents totaled $606 million compared with $236 million as of Dec 31, 2023.

Long-term debt and finance leases amounted to $29.52 billion as of Mar 31, 2024, compared with $27.76 billion as of Dec 31, 2023.

Cash flow from operating activities decreased from $1.98 billion in the first quarter of 2023 to $1.85 billion in the first quarter of 2024.

Guidance

Sempra reiterated its 2024 earnings projection in the range of $4.60-$4.90 per share. The Zacks Consensus Estimate for the same is pegged at $4.82 per share, higher than the midpoint of the company’s guided range.

SRE also reaffirmed its 2025 earnings guidance of $4.90-$5.25 per share. It still expects long-term EPS growth rate of 6-8%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Sempra has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Sempra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Sempra belongs to the Zacks Utility - Gas Distribution industry. Another stock from the same industry, National Fuel Gas (NFG), has gained 0.8% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.

National Fuel Gas reported revenues of $629.94 million in the last reported quarter, representing a year-over-year change of -12.2%. EPS of $1.79 for the same period compares with $1.54 a year ago.

For the current quarter, National Fuel Gas is expected to post earnings of $0.84 per share, indicating a change of -16.8% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for National Fuel Gas. Also, the stock has a VGM Score of B.

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