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Sempra Energy’s Current Valuation and Dividend Profile

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Dec. 4 2020, Updated 10:52 a.m. ET

Valuation

Like many of its peers, Sempra Energy (SRE) stock appears to be trading at a fair premium. On October 31, 2017, it was trading at an EV-to-EBITDA valuation multiple of 15.4x—compared to its five-year historical average of 13.0x. Currently, utilities (XLU) (VPU) have an average valuation multiple of 11x. Sempra Energy seems to be trading at a premium compared to its historical average and the industry average.

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In comparison, Edison International (EIX), Sempra Energy’s peer in California, has its valuation ratio near 10x. The biggest utility in the state, PG&E (PCG) is trading at a valuation multiple of 8x. PG&E’s discounted valuation might have been due to its recent correction after the wildfires in California.

To learn more about top utilities’ valuations, read Weekly Utility Review: Where Utilities Might Go from Here.

Sempra’s dividends

Sempra Energy is one of the fastest-growing utilities in the industry. Its dividend growth is expected to follow its earnings growth in the next few years. Management aims to increase its per share dividend 8%–9% annually—compared to the industry average of 4%–6% for the next few years.

To learn more about Sempra Energy’s dividend profile, read Sempra Energy’s Earnings and Dividend Growth Outlook.

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