It's been a great afternoon session for Sempra investors, who saw their shares rise 1.1% to a price of $94.28 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
Sempra's Valuation Is in Line With Its Sector Averages:
Sempra operates as an energy infrastructure company in the United States and internationally. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 20.52 and an average price to book (P/B) ratio of 2.2. In contrast, Sempra has a trailing 12 month P/E ratio of 20.8 and a P/B ratio of 2.07.
Sempra has moved 29.4% over the last year compared to 31.3% for the S&P 500 — a difference of -1.9%. Sempra has a 52 week high of $95.77 and a 52 week low of $66.4.
The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $10,046 | $9,448 | $10,025 | $12,857 | $14,439 | $16,720 |
| Operating Margins | 5% | 19% | 18% | 6% | 14% | 19% |
| Net Margins | 11% | 25% | 41% | 10% | 15% | 18% |
| Net Income (M) | $1,126 | $2,362 | $4,105 | $1,318 | $2,139 | $3,075 |
| Net Interest Expense (M) | $886 | $1,077 | $1,081 | $1,198 | $1,054 | $1,309 |
| Depreciation & Amort. (M) | $1,491 | $1,569 | $1,666 | $1,855 | $2,019 | $2,227 |
| Diluted Shares (M) | 593 | 578 | 580 | 626 | 633 | 633 |
| Earnings Per Share | $1.9 | $4.09 | $7.07 | $2.11 | $3.38 | $4.86 |
| EPS Growth | n/a | 115.26% | 72.86% | -70.16% | 60.19% | 43.79% |
| Avg. Price | $95.03 | $117.68 | $116.76 | $121.77 | $145.9 | $94.28 |
| P/E Ratio | 43.0 | 27.3 | 16.63 | 55.86 | 43.04 | 19.28 |
| Free Cash Flow (M) | -$28 | -$620 | -$2,085 | -$1,173 | -$4,215 | -$2,179 |
| CAPEX (M) | $3,544 | $3,708 | $4,676 | $5,015 | $5,357 | $8,397 |
| EV / EBITDA | 35.21 | 25.56 | 25.83 | 35.08 | 29.12 | 16.0 |
| Total Debt (M) | $20,906 | $20,791 | $21,791 | $21,174 | $25,567 | $28,734 |
| Net Debt / EBITDA | 10.57 | 6.21 | 6.04 | 7.67 | 6.26 | 5.19 |
| Current Ratio | 0.48 | 0.36 | 0.66 | 0.44 | 0.6 | 0.54 |
Sempra has rapidly growing revenues and increasing reinvestment in the business, decent operating margins with a positive growth rate, and a strong EPS growth trend. However, Sempra has negative cash flows, not enough current assets to cover current liabilities because its current ratio is 0.54, and a highly leveraged balance sheet.
