SRE - Embedded Expectations Analysis - 2020 02 13
Sempra Energy (SRE:USA) currently trades above corporate averages relative toUAFRS-based (Uniform) Earnings, with a 32.3x Uniform P/E. At these levels, the market has stable expectations for the firm, but management may have concerns about their pipelines in Mexico, divestitures, and wildfire risk.
Specifically, management may be concerned about the progress of their discussions with Mexican authorities about their pipelines, and they may be overstating the value of their stake in the Cameron facility. Furthermore, they may lack confidence in their Peruvian and Chilean business divestitures in the first quarter of 2020. Moreover, they may lack confidence in their ability to manage wildfire risk in California and provide customers with timely and complete information about potential wildfires. Finally, they may be concerned about transmission capex requirements in the Permian and the quality of their subcontractors.
Sempra Energy is an energy-services holding company. The company's segments are: San Diego Gas & Electric Company, which provides electric services and natural gas services in Southern California; Southern California Gas Company, which owns and operates a natural gas distribution, transmission and storage system that supplies natural gas in Southern California and portions of central California; Sempra Texas Utilities, which includes Oncor Electric Delivery Company LLC that provides electricity to consumers; Sempra Mexico, which develops, owns and operates, or holds interests in, energy infrastructure in Mexico; and Sempra LNG, which develops projects for the export of liquefied natural gas.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.