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Sempra Energy (SRE) Beats on Q4 Earnings, Revenues Up Y/Y

Zacks Equity Research

Sempra Energy’s SRE 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%.

Total Revenues

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%.

Segment Update

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.

Sempra Energy Price, Consensus and EPS Surprise

Sempra Energy Price, Consensus and EPS Surprise | Sempra Energy Quote

Financial Update

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.

2019 Guidance

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.

Zacks Rank

Sempra Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Utility Releases

DTE Energy Company DTE reported fourth-quarter 2018 operating earnings per share (EPS) of 91 cents, which missed the Zacks Consensus Estimate of 92 cents by a penny. The reported figure also declined 27.8% from the year-ago quarter’s figure of $1.26.

American Electric Power Co., Inc. AEP reported fourth-quarter 2018 operating earnings per share (EPS) of 72 cents, in line with the Zacks Consensus Estimate.

NextEra Energy, Inc. NEE reported fourth-quarter 2018 adjusted earnings of $1.49 per share, which fell short of the Zacks Consensus Estimate of $1.51 by 1.3%.

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