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Sempra Energy (SRE) to Post Q2 Earnings: What's in Store?

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Sempra Energy SRE is set to report second-quarter 2021 results on Aug 5, before market open. In the last reported quarter, the company delivered an earnings surprise of 6.50%.

Moreover, it surpassed the Zacks Consensus Estimate in two out of the trailing four quarters and missed the same twice, delivering an earnings surprise of 4.40%, on average.

Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Factors to Consider

During most part of the second quarter, major parts of the company’s service territories experienced warmer-than-normal temperature, accompanied by extreme drought condition. Such weather pattern might have spurred electricity consumption for cooling purposes. This, in turn, is expected to have boosted Sempra Energy’s second-quarter top line.

Sempra Energy Price and EPS Surprise

Sempra Energy Price and EPS Surprise
Sempra Energy Price and EPS Surprise

Sempra Energy price-eps-surprise | Sempra Energy Quote

Moreover, favorable rate case approvals in the prior quarters might have also contributed to its revenue growth.

However, exceptional heatwave during the soon-to-be-reported quarter led to wildfires like the Lava fire and Salt fire, which must have caused damages to the company’s infrastructure, thereby resulting in outages. This in turn might have disrupted smooth flow of electricity to Sempra Energy’s consumers and thus impacted its quarterly revenues.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $2.48 billion, indicating 1.8% decline from the year-ago quarter’s reported figure.

The state of California once again experienced wildfire events, which might have damaged the utility’s infrastructure. This in turn might have pushed up the company’s operating expenses, thereby hurting its bottom-line performance in the second quarter.

Moreover, absence of earnings from its Chilean business, which Sempra Energy sold in June 2020, might have hurt the company’s year-over-year earnings growth in the second quarter of 2021.

Nevertheless, in June 2021, the company announced a hike in its 2021 earnings guidance buoyed by factors like rapid adoption of clean energy in its resources. We expect Sempra Energy’s upcoming results to reflect strong earnings performance, as indicated by the increased guidance for the year.

For the second quarter, the Zacks Consensus Estimate for earnings per share is pegged at $1.59, indicating a decline of 3.6% from the year-ago quarter reported earnings.

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.

Earnings ESP: Sempra Energy has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3. 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 with the right combination of elements to post an earnings beat in the to-be-reported quarter.

CenterPoint Energy CNP has an Earnings ESP of +0.68% and holds a Zacks Rank #3.

Duke Energy DUK has an Earnings ESP of +0.15% and carries a Zacks Rank #2.

Telephone and Data Systems TDS has an Earnings ESP of +6.33% and carries a Zacks Rank #3.

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Sempra Energy (SRE) : Free Stock Analysis Report

Duke Energy Corporation (DUK) : Free Stock Analysis Report

CenterPoint Energy, Inc. (CNP) : Free Stock Analysis Report

Telephone and Data Systems, Inc. (TDS) : Free Stock Analysis Report

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