Sempra
SRE
$83.34
-0.79%
Sempra is a diversified utilities company that distributes natural gas and electricity in Southern California, owns 80% of Oncor, a transmission and distribution business in Texas, and holds a 25% stake in Sempra Infrastructure Partners, which operates LNG facilities in North America and infrastructure in Mexico. As one of the largest utility customer bases in the U.S., Sempra is a key player in the energy infrastructure space, with a strong presence in regulated utilities and growing exposure to LNG exports. The current investor narrative centers on its strategic focus on expanding its LNG and infrastructure portfolio, which is expected to drive long-term growth, while also managing the financial implications of its capital-intensive projects and a recent decline in stock price amid broader market volatility.…
SRE
Sempra
$83.34
Related headlines
Investment Opinion: Should I buy SRE Today?
Rating: Hold. Sempra is a quality utility with a strategic LNG growth story, but the current risk/reward is balanced. The analyst consensus is Buy with an average target of $101.82, implying 21.2% upside, but the negative free cash flow and revenue decline warrant caution. The stock is suitable for income-oriented investors seeking stability, but not for aggressive growth.
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SRE 12-Month Price Forecast
The AI assessment is neutral with medium confidence. Sempra's valuation is not demanding on a forward basis, but the negative free cash flow and revenue decline are significant headwinds. The stock's low beta and regulated utility base provide stability, but the growth story depends on successful LNG execution. If the company can turn free cash flow positive and show revenue growth, the stance would upgrade to bullish. Conversely, if earnings disappoint, the stance would turn bearish.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Sempra's 12-month outlook, with a consensus price target around $101.82 and implied upside of +22.2% versus the current price.
Average Target
$101.82
0 analysts
Implied Upside
+22.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$84 - $118
Analyst target range
Sempra is covered by 17 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 1.58 (where 1 is Strong Buy and 5 is Sell). The average target price is $101.82, implying an upside of +21.2% from the current price of $84.04. The distribution shows a bullish sentiment, with no Sell ratings and a majority of Overweight or Buy ratings, as seen in recent actions from Barclays, Truist, and BMO Capital.
Bulls vs Bears: SRE Investment Factors
Sempra presents a balanced but slightly bearish risk/reward at current levels. The bull case rests on a strong analyst consensus, a low forward PE, and strategic LNG growth, while the bear case is driven by negative free cash flow, revenue stagnation, and high leverage. The most critical tension is whether the company can translate its capital-intensive LNG investments into sustained earnings growth, which would justify the forward PE and analyst targets. If earnings fail to rebound as expected, the stock could remain range-bound or decline further. Currently, the bearish technical momentum and financial strain outweigh the bullish analyst sentiment, but the low forward PE offers a margin of safety if execution improves.
Bullish
- Analyst consensus Buy with 21% upside: 17 analysts rate SRE a Buy with a mean recommendation of 1.58 (1=Strong Buy, 5=Sell) and an average target of $101.82, implying +21.2% upside from the current $84.04. No Sell ratings exist, and recent actions from Barclays, Truist, and BMO Capital are positive.
- Forward PE of 15.2x suggests earnings growth: The forward PE of 15.18x is well below the trailing PE of 32.11x, indicating the market expects a significant earnings rebound. Analyst EPS estimates average $7.16 for the current fiscal year, which would support a recovery from the depressed trailing earnings.
- Strategic LNG and infrastructure growth: Sempra's 25% stake in Sempra Infrastructure Partners provides exposure to LNG export facilities and Mexican infrastructure, a key growth driver. This diversification beyond regulated utilities supports long-term earnings growth and is a core part of the investment narrative.
- Regulated utility stability with Oncor: Sempra owns 80% of Oncor, a Texas transmission and distribution business, offering stable, rate-regulated cash flows. This provides a defensive foundation, evidenced by a beta of 0.564, meaning the stock is less volatile than the market.
Bearish
- Negative free cash flow of -$5.8B: TTM free cash flow is -$5.845 billion, reflecting heavy capital expenditures on infrastructure projects. This cash burn necessitates debt or equity financing, increasing financial risk and potentially constraining dividend growth.
- Revenue decline in latest quarter: Q1 2026 revenue fell 3.77% YoY to $3.655 billion, continuing a volatile trend with no clear growth. This suggests limited organic expansion in the mature utility business, which may not justify the premium valuation.
- High debt-to-equity ratio of 1.15: Sempra's debt-to-equity ratio stands at 1.15, reflecting significant leverage. With rising interest rates, interest expenses (e.g., $382 million in Q1 2026) could pressure earnings, especially if cash flows remain negative.
- Underperformance relative to market: SRE has underperformed the S&P 500 by 16.31% over the past year, and by 23.82% over six months. The stock is in a downtrend, trading near the lower end of its 52-week range, indicating persistent selling pressure.
SRE Technical Analysis
Sempra's stock has been in a clear downtrend over the past year, with a 1-year price change of +2.34% but a significant decline from its 52-week high of $101.04. The current price of $84.04 sits at 83% of the 52-week range (calculated as (84.04-78.97)/(101.04-78.97)), indicating it is closer to the low end, which suggests a potential value opportunity but also reflects persistent selling pressure. The stock has underperformed the S&P 500 significantly, with a relative strength of -16.31% over the past year, highlighting its weak momentum relative to the broader market.
Beta
0.56
0.56x market volatility
Max Drawdown
-18.1%
Largest decline past year
52-Week Range
$80-$101
Price range past year
Annual Return
-0.2%
Cumulative gain past year
| Period | SRE Return | S&P 500 |
|---|---|---|
| 1m | -3.0% | -1.1% |
| 3m | -9.7% | +3.0% |
| 6m | -12.4% | +15.4% |
| 1y | -0.2% | +16.2% |
| ytd | -7.1% | +12.1% |
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SRE Fundamental Analysis
Sempra's revenue has been volatile, with the most recent quarter (Q1 2026) showing revenue of $3.655 billion, a decline of 3.77% year-over-year, and down from $3.798 billion in Q1 2025. The multi-quarter trend shows revenue fluctuating between $3.0 billion and $3.8 billion, with no clear growth trajectory, indicating a mature utility business with limited organic expansion. The company's net income in Q1 2026 was $1.15 billion, a significant increase from $917 million in Q1 2025, driven by a higher net margin of 31.46% compared to 24.14% in the prior year, but this was partly due to one-time items, as seen in the volatile quarterly earnings.
Quarterly Revenue
$3.7B
2026-03
Revenue YoY Growth
-3.8%
YoY Comparison
Gross Margin
35.6%
Latest Quarter
Free Cash Flow
$-5.8B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is SRE Overvalued?
Given that Sempra has positive net income, the PE ratio is the primary valuation metric. The trailing PE is 32.11x, while the forward PE is 15.18x, indicating that the market expects significant earnings growth in the next year, which is supported by analyst EPS estimates of $7.16 for the current fiscal year. The gap between trailing and forward PE suggests that the market is pricing in a recovery from the recent earnings dip, but the high trailing PE may reflect the impact of one-time charges or lower earnings in the past year.
PE
32.1x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 12x~28x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are significant. Sempra's negative free cash flow of -$5.845 billion TTM indicates that capital expenditures are outpacing operating cash flow, necessitating external financing. The debt-to-equity ratio of 1.15 is high for a utility, and with interest expenses of $382 million in Q1 2026, rising rates could squeeze margins. Revenue has been volatile, with a 3.77% YoY decline in the latest quarter, suggesting limited organic growth. The high payout ratio of 89.4% leaves little room for dividend increases if earnings falter, and the reliance on one-time items (as seen in Q1 2026 net income) adds earnings volatility.