Analysts expect California-based Sempra Energy (SRE) to see a handsome gain in 2017. In this series, we are looking at S&P 500 utilities that have more than a 10% estimated upside according to Wall Street analysts for the next year.
Sempra Energy is one of the most diversified utility (XLU) holding companies in the US. It operates in geographically diversified markets. Apart from California, it has a substantial presence in Latin America and Mexico. According to analysts’ estimates, Sempra Energy has a median price target of $114.57 compared with its current market price of $101.67. This implies a gain of nearly 13% in one year.
Among the total 16 analysts tracking Sempra Energy, six recommend it as a “buy” while five analysts view it as a “strong buy.” Five analysts recommend Sempra as a “hold.” None of the analysts have a “sell” recommendation on December 27, 2016.
Sempra Energy at a glance
Sempra Energy’s business mix of utilities and midstream infrastructure bodes well for its growth prospects. However, its struggling International segment, particularly Latin America, may remain under pressure due to unfavorable macroeconomic conditions.
Sempra Energy (SRE) is also focusing on pipeline and renewables investments. Sempra Energy’s core Electric and Gas segment is expected to be its slowest-growing segment after SRE starts its LNG (liquefied natural gas) export facility. Its Cameron export terminal in Louisiana is expected to be the company’s earnings driver in the next few years.
Sempra Energy’s dividend yield is a bit on the lower side. It currently yields 3%, while the Utilities Select Sector SPDR ETF (XLU) yields more than 3.5%. SRE’s peers PG&E (PCG) and Edison International (EIX), which also operate in California, yield 3.2% and 3%, respectively.