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What's in Store for Sempra Energy's (SRE) Q1 Earnings?

Zacks Equity Research

Sempra Energy SRE is set to report first-quarter 2020 results on May 4, before market open.

In the last reported quarter, the company delivered a positive earnings surprise of 18.32%. Moreover, it surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed in one, the average positive surprise being 6.26%.

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

Factors Under Consideration

Toward the end of February and the entire March, major parts of the company’s service territories experienced below-normal temperatures. Moreover, in March its service areas witnessed significant rainfall, while the northern parts of California experienced heavy snowfall. Together, these indicate increased electricity demand, which may have resulted in higher household expenditure on heating. This is likely to have boosted Sempra Energy’s quarterly revenues.

Moreover, proceeds from the sale of its South American businesses are likely to have boosted quarterly revenues. In line with such developments, the Zacks Consensus Estimate for first-quarter revenues of $3.18 billion suggests a rise of 9.7% from the year-ago quarter’s reported figure.

At the onset of the last week of March, Sempra Energy announced a delay in certain projects to prioritize the health of its employees in light of the coronavirus outbreak and also as the current economic environment may impact affect the schedule. This might have lowered the company’s forecasted expenditures for completing these projects, thereby boosting the bottom line.

Alongside the top-line performance, reduced operating expenses are projected to have driven the company’s bottom line. In line with this, the Zacks Consensus Estimate for first-quarter earnings is pegged at $2.26 per share, implying a 17.7% year-over-year improvement.

Additionally, the company’s management approved a dividend hike of 8% in the first quarter to $4.18 per share, which is indicative of Sempra Energy’s solid cash flow position. This should get reflected in the upcoming quarterly results.

Sempra Energy Price and EPS Surprise

Sempra Energy Price and EPS Surprise
Sempra Energy Price and EPS Surprise

Sempra Energy price-eps-surprise | Sempra Energy Quote

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Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Sempra Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But this is not the case here.

Earnings ESP: The company’s Earnings ESP is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Stocks to Consider

Here are some players from the Utilities sector that have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Algonquin Power & Utilities Corp. AQN has an Earnings ESP of +1.42% and a Zacks Rank #2. The company will announce first-quarter 2020 earnings on May 7.

Consolidated Edison ED has an Earnings ESP of +0.69% and a Zacks Rank #3. The company will announce first-quarter 2020 earnings on May 7.

New Jersey Resources Corporation NJR has an Earnings ESP of +3.86% and a Zacks Rank #3. The company will announce fiscal 2020 second-quarter earnings on May 8.

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Sempra Energy (SRE) : Free Stock Analysis Report
 
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Algonquin Power & Utilities Corp. (AQN) : Free Stock Analysis Report
 
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