Sempra Energy’s SRE ongoing systematic investments in developing infrastructure, maximizing shareholder value through regular dividend payouts and continuous progress in liquefied natural gas (LNG) projects are likely to drive its performance in the long run.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Projection & Surprise History
The Zacks Consensus Estimate for 2022 earnings has moved up by 0.6% in the past 60 days to $8.48 per share. The Zacks Consensus Estimate for 2022 revenues of $13.5 billion implies year-over-year growth of 4.9%.
Sempra Energy’s long-term (three to five years) earnings growth is projected at 5.6%. SRE delivered an average earnings surprise of 2.8% in the last four quarters.
Sempra Energy has a long history of dividend payment and has paid out dividends to shareholders consecutively since 1998. Sempra Energy’s current annualized dividend of $4.58 per share is up 4.1% from the last year’s amount of $4.40. The company has increased its dividend five times on a year-over-year basis over the last five years for an average annual increase of 7.37%.
Currently, Sempra Energy has a dividend yield of 2.7% compared with the Zacks S&P 500 composite's average of 1.5%.
Investment & LNG Project Development
Sempra Energy continues to make systematic investments in infrastructure development projects. For the 2022-2026 period, SRE expects to invest $36 billion, which comprises $21.2 billion in Sempra California, $12.1 billion in Sempra Texas and $2.3 billion in Sempra Infrastructure. These planned investments are expected to strengthen infrastructure and enable the company to serve customers more efficiently.
Demand for LNG continues to rise worldwide, Sempra Energy is engaged in developing many LNG projects. The ECA LNG Phase 1 is currently at the construction stage and is expected to come online during the second half of 2024. In addition, the developing Cameron LNG Phase 2, Hackberry CCUS, Port Arthur LNG and ECA LNG Phase 2 projects will further strengthen Sempra Energy’s position in the global LNG market.
The Debt to Capital of Sempra Energy at the end of the first quarter of 2022 was 49.4% compared with the industry average of 50.2%. This indicates that SRE is using comparatively lower debts to manage the business compared with peers.
Return on Equity
Return on Equity (ROE) indicates how efficiently a company is utilizing shareholders’ funds in the business to generate returns. At present, Sempra Energy’s ROE is 11%, higher than the industry average of 9.6%. This indicates that the company is utilizing the funds more effectively than industry peers.
In the past six months, Sempra Energy’s stock has surged 39.3% compared with the industry’s 28.7% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other similar-ranked stocks in the Zacks Utility sector include American Electric Power AEP, DTE Energy DTE and Global Water Resources GWRS.
The long-term earnings growth of American Electric Power, DTE Energy and Global Water Resources is projected at 6.2%, 6% and 15%, respectively.
The Zacks Consensus Estimate for 2022 earnings per share of American Electric Power, DTE Energy and Global Water Resources has moved up 5.7%, 0.8% and 25% year over year, respectively.
AEP, DTE and GWRS delivered an average earnings surprise of 2.4%, 9% and 154.2%, respectively, in the last four quarters.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Sempra Energy (SRE) : Free Stock Analysis Report
DTE Energy Company (DTE) : Free Stock Analysis Report
American Electric Power Company, Inc. (AEP) : Free Stock Analysis Report
Global Water Resources, Inc. (GWRS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research