Sempra Energy Rides on Investments Amid Restoration Expense Risk

Sempra Energy SRE benefits from systematic investments that will enhance the reliability of its operations, allowing it to serve its customers more efficiently. The company is also expanding its liquid natural gas (LNG) operations to strengthen its footprint in the U.S. LNG market.  However, this Zacks Rank #3 (Hold) company faces risks like unfavorable valuation and vulnerability to dismal weather events, which act as a headwind.Tailwinds Favoring SRE Sempra has a capital investment plan of $40.4 billion for the 2024-2028 period to strengthen its infrastructure and enable the company to serve its customers more efficiently. SRE expects this systematic investment to drive rate base growth of 9% annually during the 2024-2028 period.Sempra Energy is well-positioned with strategically located opportunities in North America as the demand for LNG continues to rise globally. To this end, the company plans to invest $9.20 billion in 2024, a major portion of which will go toward building the PA LNG Phase 1 project and the ECA LNG Phase 1 project.Utility service providers like Sempra Energy are investing in adding more renewable energy to their portfolio to qualify for the utility-scale renewable energy market's financial and environmental, social and governance (ESG) incentives. Sempra Infrastructure is currently developing the Cimarrón Wind project, an approximately 300MW wind generation facility in Baja California, Mexico. This project is expected to generate energy in late 2025 and commence commercial operations in the first half of 2026.Headwinds Faced by SRE Investors may be concerned about the company's comparative study of its trailing 12-month Enterprise Value/Sales (EV/Sales) ratio, which paints a somewhat dismal image. The stock reportedly has a trailing 12-month EV/Sales ratio of 6.99, which is greater than the industry’s 4.51 EV/sales ratio. Sempra Energy's trailing 12-month EV/Sales ratio was greater than the median of its one-year range, 5.61.The infrastructure and facilities of SRE, including ongoing and planned projects, are vulnerable to unfavorable weather, natural disasters, accidents and explosions. These events may cause power outages, disrupt project development and cause property damage to the company. Any of these events has the potential to significantly raise costs, such as those associated with upkeep or restoration, which would have an effect on the company’s operating results.SRE Stock Price Movement In the past six months, shares of SRE have risen 20.4% compared with the industry’s growth of 16%.Image Source: Zacks Investment ResearchStocks to Consider Some better-ranked stocks from the same sector are Atmos Energy Corp. ATO, DTE Energy DTE and NiSource Inc. NI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Atmos Energy’s long-term (three to five years) earnings growth rate is 7%. The Zacks Consensus Estimate for ATO’s fiscal 2025 EPS indicates an increase of 4.8% from the previous year’s reported number.DTE Energy’s long-term earnings growth rate is 8%. The Zacks Consensus Estimate for DTE’s 2024 EPS implies an improvement of 17.8% from that recorded in 2023.NiSource’s long-term earnings growth rate is 7%. The Zacks Consensus Estimate for NI’s 2024 EPS implies an improvement of 8.1% from the previous year’s reported number.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NiSource, Inc (NI): Free Stock Analysis Report Sempra Energy (SRE): Free Stock Analysis Report DTE Energy Company (DTE): Free Stock Analysis Report Atmos Energy Corporation (ATO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks