SRE
Sempra$93.94
Sell
Target $60.31
Report: Mar 08, 2026Utilities • Diversified Utilities • Asset-Based OperatorSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$93.94-35.8%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$60.31
(36% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$97.61
52 Week Low$61.90
Avg. 3 Month Volume3.90M
Efficiency
LTM Gross Margin46.6%
LTM EBITDA Margin39.3%
LTM EBIT Margin29.7%
LTM Operating Margin17.7%
LTM ROA1.7%
LTM ROE5.7%
LTM ROIC3.3%
LTM ROCE4.6%
Capital Structure
Market Cap (MM)$63.5B
Enterprise Value (MM)$98.5B
Shares Outstanding653.17M
Total Debt (MM)$35.02B
Cash & Equivalents (MM)$31.00M
LTM Net Debt (MM)$34.99B
LTM Net Debt/EBITDA6.5x
Growth
TTM Rev. Growth3.9%
Last 3-Yr Rev. CAGR-1.7%
Last 3-Yr EBITDA CAGR-2.3%
Last 3-Yr EPS CAGR-6.1%
Valuation
Street Target Price$100.88
LTM EV/Revenue7.2x
LTM EV/Gross Profit15.4x
LTM EV/EBIT24.2x
LTM EV/EBITDA18.3x
LTM P/E35.3x
LTM EV/FCF-129.1x
LTM P/FCF-83.2x
LTM P/TB0.6x
LTM P/B2.0x
Dividend Yield2.7%
Payout Ratio93.5%
Executive SummarySituation: Current price is $93.94 versus fair value $60.31 (-35.8% expected return), and valuation confidence is stable. Debate: Bull case depends on Sempra Infrastructure Stake Sale Closure Management expects to close the 45% stake sale to KKR by mid-2026. Bear case centers on Regulatory Disallowances and Wildfire Liability Adverse rulings from the CPUC or new wildfire-related claims (like the January 2026 SCE cross-claim) could lead to multi-billion dollar impairments and further margin erosion. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
The bull case rests on the 'Texas Super-Cycle,' where Oncor's 210 GW data center queue and 765 kV transmission expansion drive unprecedented rate-base growth. Proponents argue that the $10 billion SI stake sale creates a self-funding model that will eventually restore free cash flow and support 7-9% EPS CAGR.
Bear Case
The bear case highlights that Sempra is currently destroying value, with an incremental ROIC of negative 10.5% and a net margin that has compressed from 21.4% to 13.1%. High leverage (111% D/E) and persistent negative free cash flow make the company vulnerable to interest rate shocks and regulatory pushback in California.
Key Catalysts
Mid-Term (6-18 months)Impact: High
Sempra Infrastructure Stake Sale Closure Management expects to close the 45% stake sale to KKR by mid-2026. While intended to be accretive,...
Near-Term (0-6 months)Impact: Critical
Texas Base Rate Review Filing Oncor is expected to file an early base rate review to reset its cost structure. If the PUCT grants a lower-th...
Long-Term (18+ months)Impact: Moderate
Sempra is at a critical juncture as it attempts to execute a record $56 billion capital plan while its operating margins have just hit a mul...
Primary Risks
Concern: High
Regulatory Disallowances and Wildfire Liability Adverse rulings from the CPUC or new wildfire-related claims (like the January 2026 SCE cros...
Concern: Medium
Interest Rate Sensitivity and Leverage With $35 billion in debt and a 111% debt-to-equity ratio, Sempra is highly sensitive to sustained hig...
Concern: Medium
The stewardship verdict is mixed. While the board is highly independent and possesses deep utility expertise (e.g., former Ameren Chairman R...
Recent Activity
2025-04-04Market Movement
-6.86%Market/Sector Move -6.86%
2025-02-25SEC Filing (8-K)
-18.97%Sempra reports full-year 2024 earnings of $2.82B ($4.42 per share) and raises five-year capital plan to $56B
2024-11-06SEC Filing (8-K)
+7.31%Sempra reports Q3 2024 earnings of $638M ($1.00 per share) and updates full-year 2024 guidance to $4.86-$5.16 per share
2022-02-25SEC Filing (8-K)
+5.38%Sempra reports 2021 earnings of $1.25B ($4.01 per share) and increases five-year capital plan to $36B
Valuation Table
8.1/10Decision Grade
Scenario Range
$13
Bear
$60
Base
$112
Bull
$94