Sempra Hits 52-Week High - Analyst Blog

Sempra Energy's SRE shares attained a 52-week high of $96.72 during intraday trading on Monday, Mar 17, finally closing a trifle lower at $96.39.

What's Driving Sempra?

Sempra Energy has been riding high on its Cameron Liquefaction Project. A Sempra Energy unit, Sempra LNG, is the prime company developing this project, which comprises three liquefaction trains with a nameplate capacity of approximately 13.5 million tons per annum of LNG.

The one-year high at Sempra has stemmed from a recent announcement that CB&I and Chiyoda Corp. has been jointly awarded a contract worth $6 billion to construct the Cameron Liquefaction Project in Hackberry, LA. The award is yet another significant step in the development of the Cameron LNG liquefaction-export project.

The new and existing facilities will be wholly owned by Cameron LNG Holdings, LLC. Sempra Energy has a major 50.2% indirect stake in the Cameron Liquefaction Project. The balance will be shared between GDF SUEZ S.A., Japan LNG Investment, LLC and Mitsui & Co., Ltd., with each owning a 16.6% stake. Japan LNG Investment is a JV that has been formed by the affiliates of Nippon Yusen Kabushiki Kaisha and Mitsubishi Corporation. It is expected to create 3,000 jobs at the peak of the construction period and approximately 130 full-time jobs when fully operational.

Again, Sempra Energy recently posted better-than-expected adjusted fourth quarter 2013 earnings. Quarterly results also increased 4.6% year over year mainly due to higher contributions from energy-related businesses.

Recently, Sempra Energy raised its first-quarter 2014 dividend rate by 4.8% sequentially to 66 cents per share. The incremental dividend will be paid on April 15, 2014, to stockholders of record as of March 27. On an annualized basis, Sempra Energy's dividend rate will come to $2.64 per share, up from the previous payout of $2.52 per share. The annual dividend yield will be 2.7%, higher than the industry average.

San Diego, CA-based Sempra Energy is involved in the sale, distribution, storage and transportation of electricity and natural gas. Sempra's two regulated Californian utilities provide services to more than 20 million natural gas and electricity customers.

The company's diversified basket of businesses insulates its operations to a significant degree from regulatory rate risks. Also, geographic diversity in its assets exempts the company from any region specific risk. Thus, Sempra Energy presents a lower risk-profile relative to its peers.

Sempra Energy currently has a $23.56 billion market capitalization and carries a Zacks Rank #3 (Hold). However, some better-ranked stocks in the same sector include Delta Natural Gas Company, Inc. DGAS, Atmos Energy Corp. ATO and Chesapeake Utilities Corp. CPK. While Delta Natural Gas carries a Zacks Rank #1 (Strong Buy), Atmos Energy and Chesapeake Utilities carry a Zacks Rank #2 (Buy).