Breaking Down Sempra (SRE) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments in the energy sector? Specifically, have you considered the financial stability and growth potential of Sempra (SRE)? With a complex landscape of evolving market dynamics, regulatory changes, and strategic realignments, understanding the key financial indicators of a company like Sempra is crucial for making informed investment decisions. In 2024, Sempra reported a revenue of $13.185 billion, a 21.14% decrease from 2023, and a net income of $2.82 billion, a 7.03% decline year-over-year. Furthermore, the company's long-term debt reached $31.558 billion, marking a 13.69% increase from the previous year, while total assets grew to $96.2 billion. Let's delve deeper into these figures and explore what they reveal about Sempra's financial health and future prospects.

Sempra (SRE) Revenue Analysis

Sempra, a leading energy infrastructure company, generates revenue from a variety of sources, primarily through its utilities and infrastructure businesses. These include:

• Regulated Utilities: Revenue is derived from the distribution of electricity and natural gas to customers in California and Texas.
• Infrastructure: Revenue is generated from the development, construction, and operation of energy infrastructure assets, including LNG (liquefied natural gas) facilities and pipelines.

Analyzing Sempra's revenue streams involves understanding the contribution of each business segment to the company's overall financial performance.

Sempra's 2024 revenues were $14.58 billion, representing a -12.16% change year-over-year.

Here is a table summarizing Sempra's revenue breakdown by segment for the fiscal year 2024:

Significant changes in revenue streams often stem from regulatory decisions, economic conditions, and strategic investments in new infrastructure projects. Investors should monitor these factors to assess their potential impact on Sempra's future financial performance.

To gain more insight into Sempra's guiding principles, refer to: Mission Statement, Vision, & Core Values of Sempra (SRE).

Sempra (SRE) Profitability Metrics

Analyzing Sempra's profitability involves examining its gross profit, operating profit, and net profit margins to understand how efficiently the company generates earnings. Trends in these metrics over time provide insights into Sempra's ability to maintain or improve its financial performance. Comparing Sempra's profitability ratios with industry averages helps benchmark its competitiveness and overall financial health.

For the fiscal year 2024, Sempra reported a revenue of $14.59 billion. However, the company experienced a net loss of $1.49 billion, which translates to a loss per share of $2.33. These figures highlight the challenges Sempra faced during this period, impacting its overall profitability.

Here's a breakdown of Sempra's profitability metrics:

• Gross Profit: The gross profit indicates the revenue remaining after deducting the cost of goods sold (COGS). Analyzing the trend in gross profit helps assess Sempra's production efficiency and pricing strategies.
• Operating Profit: Operating profit is derived by subtracting operating expenses from the gross profit. This metric reflects the profitability of Sempra's core business operations before considering interest and taxes.
• Net Profit: Net profit represents Sempra's earnings after all expenses, including interest, taxes, and other non-operating items, have been deducted from total revenue. The net profit margin, calculated as net profit divided by total revenue, indicates the percentage of revenue that translates into profit.

A closer look at Sempra's operational efficiency reveals key aspects of its financial management. Cost management is crucial for maintaining healthy profit margins. Effective cost control strategies can enhance Sempra's profitability by reducing expenses and improving overall efficiency. Furthermore, monitoring gross margin trends helps assess the company's ability to manage production costs and pricing effectively.

Analyzing Sempra's profitability in comparison to its peers provides valuable insights into its competitive positioning. Industry averages serve as benchmarks for evaluating Sempra's performance and identifying areas for improvement. By comparing Sempra's profitability ratios with those of its competitors, investors can gain a better understanding of its relative strengths and weaknesses.

For additional insights into Sempra's strategic direction, explore Mission Statement, Vision, & Core Values of Sempra (SRE).

In conclusion, a comprehensive analysis of Sempra's profitability involves examining its gross profit, operating profit, and net profit margins. Monitoring trends in these metrics, comparing them with industry averages, and assessing operational efficiency are essential steps in evaluating Sempra's financial health and investment potential.

Sempra (SRE) Debt vs. Equity Structure

Understanding how Sempra finances its operations and growth is crucial for investors. This involves analyzing its debt levels, debt-to-equity ratio, and recent financing activities. Sempra's approach to balancing debt and equity offers insights into its financial strategy and risk profile. For further information, you can check: Breaking Down Sempra (SRE) Financial Health: Key Insights for Investors.

Here's a detailed look at Sempra's debt and equity structure:

Overview of Sempra's Debt Levels:

As of the fiscal year 2024, Sempra's financial structure includes a mix of both short-term and long-term debt. Evaluating these components provides a clear picture of the company’s obligations and financial health.

• Long-Term Debt: This constitutes a significant portion of Sempra's capital structure. As of 2024, the long-term debt stood at $26.484 billion. This reflects the company's reliance on long-term financing for its infrastructural projects and operational expansions.
• Short-Term Debt: Sempra also utilizes short-term debt to manage its immediate financial needs. The short-term debt for 2024 is $1.558 billion. This debt is crucial for covering current liabilities and short-term operational expenses.

Debt-to-Equity Ratio:

The debt-to-equity ratio is a critical metric for assessing a company's financial leverage. It indicates the proportion of debt and equity used to finance the company's assets. A high ratio suggests greater financial risk, while a lower ratio indicates a more conservative approach.

• As of 2024, Sempra's debt-to-equity ratio is approximately 1.41. This ratio is calculated by dividing the total liabilities by the total equity.
• Industry standards vary, but a debt-to-equity ratio of 1.0 is often considered the benchmark. Sempra's ratio indicates that it uses a higher proportion of debt compared to equity.

Recent Debt Issuances, Credit Ratings, or Refinancing Activity:

Recent activities in debt markets and credit ratings provide insights into Sempra's financial management and creditworthiness. These factors influence investor confidence and the company's ability to secure funding.

• In 2024, Sempra issued $4.24 Billion in debt securities.
• Sempra’s credit ratings have remained stable, with ratings from major agencies such as Standard & Poor's at BBB+.

Balancing Debt Financing and Equity Funding:

Sempra strategically balances debt and equity to optimize its capital structure. This balance is crucial for maintaining financial flexibility and supporting growth initiatives.

Sempra's approach to financing involves carefully weighing the benefits and risks of both debt and equity. Debt financing allows Sempra to leverage its assets and potentially increase returns on equity, but it also increases financial risk. Equity funding, on the other hand, reduces financial risk but may dilute existing shareholders' ownership.

Sempra (SRE) Liquidity and Solvency

Liquidity is crucial for assessing a company's ability to meet its short-term obligations. Key metrics like current and quick ratios provide insights into Sempra's (SRE) liquidity position. Additionally, analyzing working capital trends and cash flow statements offers a comprehensive view of its financial health. Here's an overview:

As of the fiscal year 2024, Sempra's (SRE) liquidity metrics provide a snapshot of its capacity to cover short-term liabilities. The current ratio, calculated by dividing current assets by current liabilities, offers a general overview of liquidity. A ratio above 1 indicates that Sempra (SRE) has more current assets than liabilities. The quick ratio, which excludes inventories from current assets, provides a more conservative measure of liquidity.

Here's a summary of Sempra's (SRE) liquidity positions:

• Current Ratio: This ratio helps to understand if a company has enough assets to cover its short-term liabilities.
• Quick Ratio: Provides a more conservative view by excluding inventories.
• Working Capital: Analyzing the trend of working capital (current assets minus current liabilities) helps in understanding the operational efficiency and short-term financial health.

The analysis of cash flow statements is essential for understanding Sempra's (SRE) financial dynamics. These statements are divided into three main categories:

• Operating Activities: Cash generated or used from the company's core business operations.
• Investing Activities: Cash flow from the purchase or sale of long-term assets.
• Financing Activities: Cash flow from debt, equity, and dividends.

Below is a table summarizing the cash flow trends for Sempra (SRE) based on the 2024 fiscal year:

Reviewing these trends provides insights into Sempra's (SRE) investment strategies, capital management, and overall financial stability. Monitoring these components helps investors assess the company's financial adaptability and long-term sustainability.

For more detailed insights, check out: Breaking Down Sempra (SRE) Financial Health: Key Insights for Investors

Sempra (SRE) Valuation Analysis

Determining whether a stock is overvalued or undervalued requires a multifaceted approach, incorporating various financial ratios, historical data, and analyst opinions. Here's an analysis of Sempra (SRE) based on key valuation metrics:

Is Sempra (SRE) Overvalued or Undervalued?

Several financial indicators can help assess Sempra's valuation:

• Price-to-Earnings (P/E) Ratio:
  • As of April 16, 2025, Sempra's P/E ratio is 15.85, calculated using the latest EPS of $4.44 and a stock price of $70.39.
  • The P/E ratio has decreased by 9% compared to the average of 17.5 over the last four quarters.
  • The average P/E ratio for Sempra over the past 3 years is 20.45.
  • The average P/E ratio for Sempra over the past 5 years is 21.07.
  • The current P/E ratio is 43% lower than the historical average of 27.6 over the last ten years.
  • Nasdaq reports the actual P/E ratio for 2024 as 15.29. Estimates suggest 15.39 for 2025, 13.89 for 2026, and 12.65 for 2027.
• Price-to-Book (P/B) Ratio:
  • As of April 7, 2025, the P/B ratio is 1.13.
  • The average P/B ratio for 2024 was 1.39, a 2.21% decrease from 2023.
  • Investing.com states Sempra's latest twelve months price/book is 1.5x.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio:
  • Sempra's latest twelve months EV/EBITDA is 13.2x.
  • From fiscal years 2020 to 2024, the EV/EBITDA averaged 12.4x.
  • GuruFocus.com states that the EV/EBITDA as of April 13, 2025, is 15.42.

Here's a table summarizing Sempra's EV/EBITDA data:

These metrics provide a snapshot of how the market values Sempra relative to its earnings, book value, and enterprise value.

Stock Price Trends:

• Over the last 12 months, Sempra’s stock price has increased by approximately 4.68%.
• Trading Economics forecasts Sempra's price at $69.36 by the end of the current quarter and $64.27 in one year.
• As of April 17, 2025, the closing share price for Sempra (SRE) stock was $71.12.
• Sempra's stock has shown some volatility, with a 52-week high of $95.77 and a low of $61.90.

Dividend Yield and Payout Ratios:

• Sempra has declared 163 dividends since December 14, 1984.
• In the past 12 months, Sempra has declared an equity dividend amounting to $2.48 per share.
• The current dividend yield is approximately 3.43%, with a dividend amount of $0.645 per share for the most recent quarter.
• Sempra's next quarterly payment date is on April 15, 2025, with a dividend payment of $0.64 per share for shareholders who owned SRE shares before March 20, 2025.
• The dividend payout ratio is approximately 54.20%, indicating that Sempra retains a significant portion of its earnings for reinvestment and growth.
• Sempra has demonstrated a consistent dividend growth streak of over 16 years.
• The forward dividend yield is 3.70%.
• A recent analysis highlights Sempra's dividend yield at 3.63% with a payout ratio of 56.11%.

Analyst Consensus:

• Based on evaluations from 14 Wall Street analysts, Sempra has a consensus rating of 'Moderate Buy.'
• The average price target is $80.31, suggesting a potential upside of approximately 12.88% from the current price.
• The highest price target is $94.00, while the lowest is $70.00.
• TipRanks reports that based on 14 Wall Street analysts offering 12-month price targets for Sempra Energy in the last 3 months, the average price target is $79.50, with a high forecast of $87.00 and a low forecast of $70.00.

Considering these factors, Sempra appears to be reasonably valued with potential for moderate growth, supported by a solid dividend yield and a 'Moderate Buy' consensus from analysts.

See also: Exploring Sempra (SRE) Investor Profile: Who’s Buying and Why?

Sempra (SRE) Risk Factors

Several internal and external factors could significantly impact Sempra's (SRE) financial health. These risks span industry competition, regulatory changes, and overall market conditions. Understanding these potential challenges is crucial for investors.

Here's a breakdown of key risks:

• Regulatory Challenges: Sempra faces regulatory hurdles, particularly in California. A proposed decision by an Administrative Law Judge could lower the return on equity (ROE) for California utilities in 2025 due to changes in the cost of capital mechanism. This potential reduction in ROE could have a material impact on Sempra's earnings, with some analysts estimating a negative impact of $0.09 per share or -1.7% for 2025.
• Wildfire Risks: Sempra is dealing with ongoing wildfire concerns in California. San Diego Gas & Electric (SDG&E), a Sempra subsidiary, actively monitors fire threats and implements Public Safety Power Shutoffs to mitigate risks. These measures, while necessary for public safety, can impact the company's operations and public perception.
• Financial Performance: Sempra reported full-year 2024 GAAP earnings of $2.82 billion, or $4.42 per diluted share, compared to 2023 GAAP earnings of $3.03 billion, or $4.79 per diluted share. On an adjusted basis, the company's full-year 2024 earnings were $2.97 billion, or $4.65 per diluted share, compared to $2.92 billion, or $4.61 per diluted share in 2023.
• Earnings Guidance: Sempra is updating its full-year 2024 GAAP earnings-per-common share (EPS) guidance range to $4.86 to $5.16 reflecting actual results through the third quarter and affirming its full-year 2024 adjusted EPS guidance range of $4.60 to $4.90. The company is also affirming its full-year 2025 EPS guidance range of $4.90 to $5.25.
• Macro and Political: Macro & Political risks accounted for 11% of the risk overview for Q4 2024.
• Legal and Regulatory: Legal & Regulatory risks accounted for 17% of the risk overview for Q4 2024.
• Finance & Corporate: Finance & Corporate risks accounted for 37% of the risk overview for Q4 2024.

Sempra's management is actively pursuing several mitigation strategies to address these risks and bolster financial stability.

These strategies include:

• Capital Recycling: Sempra is focusing on capital recycling through asset sales to improve its financial position. Successful execution of these initiatives could lead to enhanced earnings per share, improved credit metrics, increased financial flexibility, and streamlined operations.
• Strategic Initiatives: Sempra is actively pursuing strategic initiatives to enhance its financial position and capitalize on growth opportunities. One key focus area is capital rotation through asset sales.
• Investment in Safety and Reliability: Investing in safe and resilient operations is a key sustainable business strategy for Sempra. Sempra California's SoCalGas invested $630 million to infrastructure integrity management and pipeline safety enhancement programs. Sempra Texas's Oncor invested $63.5 million in distribution automation in support of increased reliability, greater operational flexibility and enhanced analytical capabilities.
• Wildfire and Climate Resilience Center: Opening a new Wildfire and Climate Resilience Center to promote public safety by mitigating the risk of wildfires and supporting research, development and implementation of innovative solutions

Here's a summary of Sempra's financial performance:

For more insights into Sempra's strategic direction, you might find this resource helpful: Mission Statement, Vision, & Core Values of Sempra (SRE).

Sempra (SRE) Growth Opportunities

Sempra's growth prospects are anchored in several key drivers, including strategic investments in energy infrastructure, expansion into high-growth markets, and a commitment to innovation in sustainable energy solutions. These factors collectively contribute to a positive outlook for future revenue and earnings.

Key growth drivers for Sempra include:

• Infrastructure Investments: Sempra is actively investing in critical energy infrastructure projects, particularly in renewable energy and natural gas distribution. These investments are designed to meet the increasing demand for cleaner energy sources and enhance the reliability of energy delivery systems.
• Market Expansion: The company is strategically expanding its operations into regions with high growth potential, such as North America, focusing on areas where energy demand is rapidly increasing.
• Sustainable Energy Solutions: Sempra is committed to developing and deploying sustainable energy solutions, including renewable natural gas (RNG) and hydrogen, positioning itself to capitalize on the global shift towards cleaner energy.

Future revenue growth projections and earnings estimates for Sempra reflect a positive trajectory, driven by these strategic initiatives. Analysts project steady growth in both revenue and earnings per share (EPS) over the next several years, supported by the company's regulated utility operations and expanding infrastructure projects.

Strategic initiatives and partnerships that may drive future growth include:

• Renewable Energy Projects: Sempra is developing several large-scale renewable energy projects, including solar and wind farms, which are expected to contribute significantly to future revenue.
• Technology Adoption: Embracing new technologies, such as advanced metering infrastructure (AMI) and smart grid solutions, enhances operational efficiency and customer service.
• Strategic Alliances: Forming strategic alliances with technology providers and other energy companies to accelerate the development and deployment of innovative energy solutions.

Sempra possesses several competitive advantages that position it favorably for future growth:

• Regulated Utility Operations: A significant portion of Sempra's earnings comes from regulated utility operations, providing a stable and predictable revenue stream.
• Geographic Diversification: Operating in diverse geographic regions reduces the company's exposure to regional economic fluctuations and regulatory changes.
• Commitment to Sustainability: Sempra's commitment to sustainability and clean energy aligns with growing global demand, enhancing its long-term growth prospects.

For additional insights into Sempra's investor profile, see Exploring Sempra (SRE) Investor Profile: Who’s Buying and Why?