Morningstar Rating

Stock Research and Analysis

by Mark Barnett

Bulls Say

Opportunities for rate base growth at Sempra's utilities are above average in the U.S., and California regulation still allows timely recovery of capital expenditures and a dynamic cost of capital.
As an early and large investor in the Mexican energy sector, Sempra could see an outsize share of new development projects there come its way.
Sempra's LNG terminals and pipeline and storage facilities give investors moderate exposure to a growing market for natural gas in the U.S. and Mexico. The Cameron facility would be a strong long-term cash cow should low U.S. gas prices persist. Read more 

Bears Say

Sempra's nonregulated businesses bring increased risk. Income investors looking for low-risk dividends may find less appeal than from pure-play regulated utilities.
Economic troubles in California have led to pressure on utilities to keep rates down and could slow the renewables rush. Earned returns will fall at both utilities, though lower debt costs offset some impact.
U.S. LNG deliveries are nonexistent, despite the $1 billion Sempra sank into Cameron. Rockies gas has no market in the East, crushing returns at REX. Capital allocation is never guaranteed to succeed. Read more 

Management

Debra Reed succeeded Don Felsinger as Sempra's CEO in 2011. Reed is an engineer by training, and had led Sempra's flagship regulated utilities since 2006, successfully overseeing a period of significant growth there. She began her career with Sempra's   Read more 

Profile

Sempra Energy serves one of the largest utility customer bases in the U.S., distributing natural gas and electricity in Southern California. SoCalGas and San Diego Gas &   Read more 

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