Sempra Energy (SRE) Beats On Q3 Earnings, Keeps '16 View

Sempra Energy’s (NYSE:SRE) third-quarter 2016 adjusted earnings per share came in at $1.02, beating the Zacks Consensus Estimate of 97 cents by 5.2%. Earnings also improved 3% from 99 cents reported in the prior-year quarter.

GAAP earnings were $2.46 per share in the quarter, compared with 99 cents a year ago.

Total Revenues

In the quarter under review, total revenue was $2,535 million, up 2.2% year over year, due to higher contributions from the energy-related businesses (1.1%) and utilities (2.3%). However, total revenue missed the consensus mark of $2,665 million by 4.9%.

Segment Update

San Diego Gas & Electric (SDG&E): Quarterly earnings were $183 million compared with the year-ago figure of $170 million. During the quarter, California Public Utilities Commission approved SDG&E's proposal to construct a new 15-mile, 230-kilovolt transmission line to improve reliability. Also, the CPUC approved a proposal by SDG&E to build two new energy storage projects in San Diego County to enhance electric reliability.

Southern California Gas Company (SoCalGas): The segment registered no earnings in the third quarter of 2016, compared to a year-ago loss of $8 million.

Sempra South American Utilities: The segment recorded earnings of $46 million in the third quarter, up from $43 million in the prior-year quarter.

Sempra Mexico: The segment recorded earnings of $332 million, up from $63 million in the prior-year quarter, primarily due to the $350 million after-tax re-measurement gain on the Gasoductos de Chihuahua acquisition. This was offset by the $65 million after-tax charge related to the planned sale of the Termoeléctrica de Mexicali plant and beneficial effects of foreign currency and inflation in third-quarter 2015.

Sempra Renewables: The segment recorded quarterly earnings of $17 million, up from $15 million in the prior-year quarter.

Sempra Natural Gas: The segment reported earnings of $77 million, compared to the year-ago quarter’s $1 million. The improvement was driven by the $78 million after-tax gain from the sale of EnergySouth.

Parent & Other: The segment reported a loss of $33 million in the third quarter, narrower than the year-ago loss of $36 million.

Financial Update

As of Sep 30, 2016, Sempra Energy’s cash and cash equivalents were $518 million, compared with $403 million as of Dec 31, 2015.

Long-term debt was $13,522 million as of Sep 30, 2016, compared with $13,134 million at 2015-end.

Cash flow from operating activities was $1,691 million in the first nine months of 2016, down from $2,089 million in the year-ago period.

In the third quarter, the company’s capital expenditures and investments were $2,247 million, compared with $783 million in the prior-year quarter.

Guidance

Sempra Energy reiterated its 2016 adjusted earnings guidance at the range of $4.60 to $5.00 per share.

Zacks Rank

Sempra Energycurrently carries a Zacks Rank #3 (Hold).You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Peer Releases

DTE Energy Company (NYSE:DTE) reported third-quarter 2016 operating earnings per share of $1.96, beating the Zacks Consensus Estimate of $1.54 by 27.3%. Reported earnings were also up 40% from the year-ago figure of $1.40.

Entergy Corporation (NYSE:ETR) reported third-quarter 2016 operating earnings of $2.31 per share, beating the Zacks Consensus Estimate of $1.95 by 18.5%. The reported number also improved 21.6% from $1.90 reported a year ago.

CMS Energy Corporation (NYSE:CMS) reported third-quarter 2016 adjusted earnings per share of 70 cents, beating the Zacks Consensus Estimate of 60 cents by 16.7%. Quarterly earnings also increased 32.1% from the year-ago figure of 53 cents.

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