Sempra
SRE
$96.16
-0.07%
Sempra is a major diversified utility company operating in the United States, primarily distributing natural gas and electricity in Southern California and holding a significant 80% stake in Oncor, a transmission and distribution utility in Texas. The company is a key player in the regulated utility space and is also expanding its footprint in energy infrastructure through its ownership in Sempra Infrastructure Partners, which focuses on liquefied natural gas (LNG) facilities in North America and infrastructure in Mexico. The current investor narrative centers on its strategic pivot towards high-growth infrastructure and LNG assets, positioning it as a beneficiary of the global energy transition and increased demand for North American natural gas exports, while simultaneously navigating the regulatory environment and capital investment cycles typical of its core utility operations.…
SRE
Sempra
$96.16
SRE 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Sempra's 12-month outlook, with a consensus price target around $125.01 and implied upside of +30.0% versus the current price.
Average Target
$125.01
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$77 - $125
Analyst target range
Analyst coverage for Sempra appears limited in the provided dataset, with only 5 analysts cited for earnings estimates, and no consensus price target or recommendation data is presented. The institutional ratings data shows recent activity, with firms like Wells Fargo, JP Morgan, Barclays, and Morgan Stanley maintaining 'Overweight' or equivalent ratings, while UBS has a 'Neutral' stance and Argus Research upgraded from 'Hold' to 'Buy' in early March. The lack of a quantified consensus target price and the small analyst count suggest that while covered by major institutions, the stock may not have the breadth of coverage typical of mega-cap peers. This can sometimes lead to higher volatility and less efficient price discovery. The pattern of recent ratings is generally stable and bullish among the reporting firms, indicating institutional confidence in the company's strategic direction.
Bulls vs Bears: SRE Investment Factors
The bull case for SRE is compelling, driven by a powerful technical uptrend, a strategic pivot to high-growth LNG infrastructure, and a forward valuation that prices in significant earnings acceleration. However, the bear case presents substantial fundamental concerns, most notably a massive -$6.05 billion free cash flow burn and an elevated trailing P/E of 31.4x that leaves little room for disappointment. Currently, the bullish momentum and growth narrative appear to have stronger evidence, as reflected in the stock's 47.7% annual gain and supportive analyst ratings. The single most important tension in the investment debate is the conflict between the market's forward-looking optimism for infrastructure-led earnings growth and the present reality of weak cash generation and high valuation. The resolution of this tension—specifically, whether the capital investments can generate sufficient returns to justify the current price and cash burn—will ultimately determine the stock's direction.
Bullish
- Powerful Technical Uptrend: SRE has dramatically outperformed the market with a 1-year return of +47.7% vs. SPY's +29.5%. The stock is trading at 98% of its 52-week high ($101.04), demonstrating sustained bullish momentum and relative strength of +18.2% over the past year.
- Attractive Forward Valuation: The forward P/E of 17.9x represents a significant discount to the trailing P/E of 31.4x, implying the market is pricing in a substantial 43% earnings growth over the next year. This forward multiple is more reasonable for a utility with growth prospects.
- Strategic Growth in LNG/Infrastructure: The company's pivot towards high-growth LNG and energy infrastructure (Sempra Infrastructure Partners) positions it to capitalize on global demand for North American natural gas exports, offering a growth narrative beyond its stable, regulated utility earnings.
- Strong Institutional Analyst Support: Recent institutional ratings from major firms like Wells Fargo, JP Morgan, and Morgan Stanley are predominantly 'Overweight' or 'Buy', with Argus Research upgrading from Hold to Buy in March 2026, indicating professional confidence in the strategic direction.
Bearish
- Massive Negative Free Cash Flow: Trailing twelve-month free cash flow is deeply negative at -$6.05 billion, indicating the company is funding aggressive capital expenditures externally. This heavy cash burn raises questions about future funding needs, dividend sustainability, and balance sheet pressure.
- Elevated Trailing Valuation: A trailing P/E of 31.4x is high for a utility and sits above its own recent historical range (e.g., 20.6x at end of 2024). This suggests much of the future growth from infrastructure investments is already priced in, leaving little margin for error.
- Weak Recent Earnings & Profitability: Q4 2025 net income of $352M declined 48% year-over-year from $676M. Quarterly revenue growth is flat at +0.35% YoY, highlighting the low-growth nature of the core regulated utility business amidst the investment phase.
- Technically Overextended Near Resistance: Trading at $98.82, just 2.2% below the 52-week high of $101.04, the stock is testing a major resistance level. The 1-month relative strength of +6.04 suggests it may be overbought, increasing the risk of a near-term pullback or consolidation.
SRE Technical Analysis
The stock is in a sustained and powerful uptrend, evidenced by a 1-year price change of +47.713%, significantly outperforming the SPY's +29.52% gain. With a current price of $98.82, it is trading at approximately 98% of its 52-week high of $101.04, indicating the stock is testing its absolute resistance level and is in a momentum-driven, potentially overextended state. This positioning near the highs suggests strong bullish conviction but also raises the risk of a technical pullback if the resistance level holds firm. Recent momentum remains robust, with the stock up +6.50% over the past month and +11.26% over the past three months, both figures dramatically outpacing the broader market's returns of +0.46% and -2.1%, respectively. This acceleration in short-term performance, building on the strong yearly trend, signals continued buying pressure and relative strength, though the 1-month Relative Strength of +6.04 indicates the stock may be entering overbought territory. Key technical levels are clearly defined, with immediate resistance at the 52-week high of $101.04 and support at the 52-week low of $65.65. A decisive breakout above $101.04 would signal a continuation of the bullish trend, while a failure could lead to consolidation. The stock's beta of 0.677 indicates it is approximately 32% less volatile than the market, which is typical for a utility and suggests it offers a defensive characteristic within its powerful uptrend.
Beta
0.68
0.68x market volatility
Max Drawdown
-12.4%
Largest decline past year
52-Week Range
$69-$101
Price range past year
Annual Return
+37.9%
Cumulative gain past year
| Period | SRE Return | S&P 500 |
|---|---|---|
| 1m | +1.1% | +4.9% |
| 3m | +5.3% | +0.6% |
| 6m | +5.5% | +5.1% |
| 1y | +37.9% | +28.8% |
| ytd | +7.2% | +1.8% |
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SRE Fundamental Analysis
Revenue growth has been modest but positive, with Q4 2025 revenue of $3.77 billion representing a slight year-over-year increase of 0.35%. However, examining the quarterly sequence from Q1 2025 ($3.80B) to Q4 2025 ($3.77B) shows revenue has been relatively flat, indicating stable but not accelerating top-line growth, which is characteristic of a regulated utility business. The So Cal Gas segment, with revenue of $1.76 billion in the latest period, appears to be the larger contributor compared to the Electricity segment's $939 million. The company is profitable, reporting net income of $352 million for Q4 2025, though this represents a significant decline from the $676 million reported in Q4 2024. Profitability margins show a gross margin of 34.36% for the quarter and a net margin of 9.35%, but the trailing twelve-month free cash flow is deeply negative at -$6.05 billion, highlighting a critical aspect of the financial profile. The balance sheet shows a debt-to-equity ratio of 1.15, indicating a leveraged but manageable capital structure typical for capital-intensive utilities. The current ratio of 1.59 suggests sufficient short-term liquidity. The deeply negative free cash flow, against a backdrop of positive net income, points to substantial capital expenditures, likely related to the company's significant infrastructure investment programs, which is funding growth externally rather than from internal cash generation.
Quarterly Revenue
$3.8B
2025-12
Revenue YoY Growth
+0.00%
YoY Comparison
Gross Margin
+0.34%
Latest Quarter
Free Cash Flow
$-6.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is SRE Overvalued?
Given the positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. Sempra's trailing PE ratio is elevated at 31.37x, while its forward PE is notably lower at 17.87x. This substantial gap implies the market is pricing in a significant recovery and growth in earnings over the next twelve months, aligning with the company's heavy investment phase. Compared to sector averages (implied but not provided in the data), a trailing PE of 31.37x would typically represent a premium for a utility, which investors may justify based on Sempra's growth-oriented infrastructure projects and LNG exposure rather than its regulated utility earnings alone. Historically, the stock's own valuation has fluctuated; the current trailing PE of 31.37x is above the recent historical range seen in the data, such as the 20.60x at the end of 2024 and the 15.77x at the end of 2023. Trading near the top of its own historical PE band suggests the market has already priced in optimistic expectations for future earnings growth and successful execution of its capital plans, leaving little room for error.
PE
31.4x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range -16x~155x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks are centered on cash flow and execution. The company's deeply negative TTM free cash flow of -$6.05 billion signals heavy capital investment, funded externally. This raises risks around future debt issuance, potential equity dilution, and pressure on the dividend, which has a high payout ratio of 89.4%. Furthermore, net income volatility is evident, with a 48% YoY decline in Q4 2025, and revenue growth is stagnant at 0.35% YoY, indicating the core utility business offers limited organic growth to offset investment risks.
Market & Competitive Risks include valuation compression and macro sensitivity. Trading at a trailing P/E of 31.4x—a premium to its own recent history—SRE is vulnerable to multiple contraction if earnings growth fails to materialize as expected. While its beta of 0.68 provides some defense, the stock's 47.7% run-up in a year makes it susceptible to profit-taking and sector rotation out of outperforming names. Regulatory risks are ever-present for utilities, and competition in the burgeoning North American LNG export market could pressure future returns from the growth infrastructure segment.
Worst-Case Scenario involves a perfect storm of execution missteps and a shift in market sentiment. Key LNG projects face delays or cost overruns, the regulated rate base growth underwhelms, and rising interest rates increase financing costs on its leveraged balance sheet (D/E of 1.15). This could trigger analyst downgrades, multiple compression from the current 31.4x trailing P/E towards its historical low range, and a flight from the overbought technical position. A realistic downside could see the stock re-test its 52-week low of $65.65, representing a potential loss of approximately -34% from the current price of $98.82.