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Factors Setting the Tone for Sempra Energy (SRE) Q1 Earnings

Zacks Equity Research

Sempra Energy SRE is set to report first-quarter 2019 results on May 7, before market open.

In the last reported quarter, the company delivered a positive earnings surprise of 6.12%. Moreover, it surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average beat being 4.00%.

Let’s see how things are shaping up prior to this announcement.

Sempra Energy Price and EPS Surprise

Sempra Energy Price and EPS Surprise | Sempra Energy Quote

Factors at Play

Sempra Energy’s service territories witnessed favorable temperature for most of the first quarter. This indicates increased electricity demand in its service territory, which in turn must have provided a boost to the company’s top-line performance. The Zacks Consensus Estimate for quarterly revenues stands at $3.12 billion, suggesting growth of 5.3% from the year-ago quarter’s figure.

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Also, higher pipeline activities and accretion from its Oncor acquisition are expected to boost the company’s bottom line in the quarter to be reported. In line with this, the Zacks Consensus Estimate for quarterly earnings is pegged at $1.69, indicating an 18.2% improvement from the year-ago quarter number.

During the first quarter, Sempra Energy completed the sale of its non-utility U.S. natural gas storage facilities to an affiliate of ArcLight Capital Partners for $328 million in cash. We may expect the company’s cash flow statement to duly reflect the sale proceeds from this divestiture in the soon-to-be-reported quarter.

These apart, the company’s management approved a dividend hike of 8.1% in the first quarter, which is indicative of Sempra Energy’s solid cash flow position. This should get reflected in the upcoming quarterly results.

Furthermore, Sempra Energy started the sale procedure of its equity interests in its South American businesses, which includes an 83.6% stake in Peru and a 100% stake in Chile. We can expect further updates on this transaction, once the company releases its first-quarter 2019 results.

Earnings Whisper

Our proven model does not conclusively show that Sempra Energy is likely to beat estimates in first-quarter 2019. This is because a stock needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Sempra Energy has an Earnings ESP of 0.00%.

Zacks Rank: The company currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into earnings announcements.

Stocks That Warrant a Look

Investors can consider the following players from the same sector that have the right combination of elements to post an earnings beat in the upcoming releases.

South Jersey Industries, Inc. SJI has an Earnings ESP of +3.56% and a Zacks Rank #3. The company is slated to report first-quarter 2019 results on May 8.

PNM Resources, Inc. PNM has an Earnings ESP of +3.45% and a Zacks Rank #2. The company is slated to report first-quarter 2019 results on May 7.

Atmos Energy Corporation ATO has an Earnings ESP of +0.35% and a Zacks Rank #3. The company is slated to report second-quarter fiscal 2019 results on May 7.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

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PNM Resources, Inc. (Holding Co.) (PNM) : Free Stock Analysis Report
 
Sempra Energy (SRE) : Free Stock Analysis Report
 
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
 
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