Sempra Energy SRE paints a promising picture for investors with an upward trajectory in earnings estimates, a strong footing in the LNG domain, and well-thought-out investments. The utility sector beckons, and here’s why Sempra Energy deserves a second look.
Let’s delve into the key factors that position this Zacks Rank #2 (Buy) stock as a compelling investment opportunity.
Stellar Growth Expectations & Historical Track Record
In the last 60 days, SRE’s 2024 earnings per share (EPS) estimate has enjoyed a modest uptick, now standing at $4.84. Furthermore, the projected revenues for 2024 hint at a healthy 4.88% year-over-year growth. With an estimated earnings growth rate of 4.95% over the next three to five years, Sempra Energy showcases consistency. The company has impressively surpassed earnings estimates by 5.51% on average in the past four quarters.
Impressive Return on Equity
Return on equity (ROE) is a barometer of a company’s efficiency in utilizing funds to yield higher returns. At present, Sempra Energy boasts an ROE of 9.45%, outshining the sector average of 8.51%. This signals that the company is employing its capital more effectively compared to industry peers.
Financial Stability Matters
With a times interest earned ratio (TIE) of 3 in the fourth quarter of 2023, Sempra Energy seems well-equipped to handle its interest payment obligations in the short term sans hitches. As of the same period, the company’s total debt to capital ratio lingered at a respectable 48.01%, falling below the industry’s standard of 49.64%.
Dividend Delight
Sharpening its focus on rewarding shareholders, Sempra Energy raised its quarterly dividend to 62 cents per share in February 2023, marking a 4.2% surge from the prior payout. The current annual dividend stands at $2.48 per share, offering an appealing yield of 3.4% as opposed to the Zacks S&P 500 composite’s 1.29%.
Commitment to Progress
Sempra Energy remains dedicated to fortifying its infrastructure projects through strategic investments. The company’s investment plan for the 2024-2027 period allocates a substantial $48 billion, with $24.1 billion earmarked for Sempra California, $19.5 billion for Sempra Texas Utilities, and $4.4 billion for Sempra Infrastructure.
Market Performance and Beyond
Despite industry challenges, Sempra Energy shares have shown resilience, recording a 0.1% incline over the past year in contrast to the sector’s 4.2% average decline.
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Exploring Alternatives
Other top-performing stocks in the sector worth considering are Atmos Energy ATO, American Water AWK, and Entergy ETR, each holding a Zacks Rank #2 presently. For a comprehensive list of top stocks, visit Zacks’ #1 Rank (Strong Buy) selection here.
Atmos Energy is poised for a long-term earnings growth rate of 7.26%, with a 2024 EPS estimate of $6.59, indicating an 8.03% year-over-year rise.
American Water projects a long-term earnings growth rate of 7.76%, with a 2024 EPS estimate of $5.20, signaling a 6.12% year-over-year increase.
Entergy anticipates a long-term earnings growth rate of 7.01%, with a 2024 EPS estimate of $7.22, pointing towards a 6.65% year-over-year uptick.
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Free: See Our Top Stock And 4 Runners Up
Sempra Energy (SRE) : Free Stock Analysis Report
Entergy Corporation (ETR) : Free Stock Analysis Report
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
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The thoughts and opinions articulated in this content are those of the author and do not necessarily reflect the viewpoints of Nasdaq, Inc.
