"Given the relative solid performance of SRE shares this quarter against a backdrop of energy and emerging market uncertainty, we now see the stock as adequately pricing in growth options through 1H15," analysts said.
"Near-term outperformance requires an increase in the 2019 EPS growth outlook, potentially driven in part by a MLP or YieldCo and significant visibility into LNG expansion," analysts added.
Separately, TheStreet Ratings team rates SEMPRA ENERGY as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SEMPRA ENERGY (SRE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 1.7%. Since the same quarter one year prior, revenues rose by 10.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SEMPRA ENERGY has improved earnings per share by 16.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, SEMPRA ENERGY increased its bottom line by earning $4.02 versus $3.49 in the prior year. This year, the market expects an improvement in earnings ($4.52 versus $4.02).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Multi-Utilities industry average. The net income increased by 15.6% when compared to the same quarter one year prior, going from $301.00 million to $348.00 million.
- Net operating cash flow has significantly increased by 178.66% to $627.00 million when compared to the same quarter last year. In addition, SEMPRA ENERGY has also vastly surpassed the industry average cash flow growth rate of -3.66%.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 26.01% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- You can view the full analysis from the report here: SRE Ratings Report