SRE
Sempra
$92.80
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 29.0% above fair value
You pay
$92.80
Bear
$62.94
Fair
$71.94
Bull
$80.93
Bear
$62.94
-32.2%
$3.78 × 14x P/E
Fair
$71.94
-22.5%
$3.78 × 16x P/E
Bull
$80.93
-12.8%
$3.78 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
24.5x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $106.20 from 26 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $71.94 per share.
Warnings
The company's reported profits differ from official accounting profits by 38%. Check what costs are being left out of the adjusted number.
The company pays out 95% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $106.20 (from 26 analysts). Our estimate is 43% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples