Sempra Energy Touches 52-Week High - Analyst Blog

Sempra Energy's SRE shares once again attained a 52-week high of $100.69 during intraday trading on Friday, May 30, finally closing a trifle lower at $100.35. The closing share price represents a one-year return of 23.3%. The average trading volume for the last three months aggregated approximately 832K shares.

What's Driving Sempra?

The southern California-based energy services holding company is involved in the sale, distribution, storage and transportation of electricity and natural gas. This Zacks Rank #3 (Hold) company has a market cap of $24.61 billion and has delivered positive earnings surprises for the last two quarters with an average beat of 12.4%.

Recently, Sempra Energy posted impressive first quarter 2014 earnings that came above the Zacks Consensus Estimate by 9.6%. The quarterly results also showed an impressive 43.1% growth from the year-ago profit mainly due to higher contributions from its utilities. Sempra's two regulated Californian utilities provide services to more than 20 million natural gas and electricity customers.

Mexico's state-owned electric utility, Comision Federal de Electricidad (CFE), recently announced five pipeline bids. These bids comprise three in the U.S. with an estimated cost of $1.2 billion. Sempra Energy's unit, Sempra U.S. Gas & Power, seems to be well positioned to grab the opportunities here. These ventures will be supported by long-term take-or-pay contracts and have targeted operation dates of Mar 2016 through Mar 2017.

Again, the company is also focused on its Cameron LNG Liquefaction-export 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 construction is slated to start later this year and the company has several large projects in Mexico and Peru coming online in the second half of 2014.

Sempra Energy has a long-standing record of consistent dividend payments at incremental rates. It generally boosts its quarterly dividend once a year, in February. The last increase in Feb 2014 was 4.8%, marking the 11th consecutive quarterly payout. The company presently shells out an annual dividend of $2.64 per share (quarterly $0.66 per share), yielding approximately 2.63%.

Sempra Energy presently carries a Zacks Rank #3 (Hold). Better-ranked stocks worth considering are New Jersey Resources Corp. NJR, AGL Resources Inc. GAS and Atmos Energy Corp. ATO. While New Jersey Resources carries a Zacks Rank #1 (Strong Buy), AGL Resources and Atmos Energy hold a Zacks Rank #2 (Buy).