Sempra 2025 Q1 Earnings Misses Targets Despite Net Income Growth

Sempra (SRE) reported its fiscal 2025 Q1 earnings on May 08th, 2025. Sempra's Q1 revenue of $3.80 billion fell short of the expected $3.92 billion, highlighting a revenue miss amid rising net earnings. The company has updated its 2025 GAAP EPS guidance to a range of $4.25-$4.65, reflecting actual results, and reaffirmed its adjusted EPS guidance of $4.30-$4.70. Despite facing challenges, Sempra continues to execute strategic initiatives, maintaining its long-term EPS growth target of 7% to 9% for 2025 through 2029.

Revenue

In the first quarter of 2025, Sempra's total revenue reached $3.80 billion, increasing by 4.5% compared to $3.64 billion in 2024 Q1. This growth was driven by higher revenues from natural gas, which contributed $2.36 billion, and electric utilities, which added $1.06 billion. The energy-related businesses, however, saw a decline in revenues, contributing $381 million compared to $475 million the previous year.

Earnings/Net Income

Sempra's EPS rose 9.4% to $1.39 in 2025 Q1 from $1.27 in 2024 Q1, marking continued earnings growth. Meanwhile, the company's profitability strengthened with net income of $919 million in 2025 Q1, marking 4.3% growth from $881 million in 2024 Q1. Remarkably, the company has sustained profitability for more than 20 years over the corresponding fiscal quarter, underscoring strong operational resilience. The EPS increase reflects positively on the company's performance.

Post-Earnings Price Action Review

The strategy of buying Sempra (SRE) shares after a quarter-over-quarter revenue increase and holding for 30 days has resulted in a 16.67% return over the past five years, significantly underperforming the benchmark's 92.56% return. Despite the revenue growth, this approach has demonstrated a low Sharpe ratio of 0.13, indicating poor risk-adjusted returns. Furthermore, the strategy experienced a maximum drawdown of -36.81%, underscoring its high risk and emphasizing the importance of effective risk management. As such, while there may be potential for gains, investors should be wary of the inherent risks associated with this strategy and consider alternative approaches for more robust financial outcomes.

CEO Commentary

"We are pleased to report a solid quarter for Sempra, which is the direct result of continued focus on delivering strong financial performance while making steady progress on our strategic initiatives," said Jeffrey W. Martin, Chairman and CEO of Sempra. Martin highlighted the company's disciplined growth strategy, emphasizing a commitment to delivering safer and more reliable energy to nearly 40 million consumers. He noted the significant investments in critical infrastructure projects, particularly in Texas, to meet rising electricity demand and enhance reliability. The CEO expressed optimism about the company's performance and its ability to advance its strategic priorities.

Guidance

Sempra updated its full-year 2025 GAAP earnings-per-common-share (EPS) guidance range to $4.25 to $4.65, reflecting actual results through the first quarter, while affirming its adjusted EPS guidance range of $4.30 to $4.70. For fiscal 2026, the company projects EPS in the range of $4.80 to $5.30. Sempra also guided to achieving or exceeding its projected long-term EPS compound annual growth rate of 7% to 9% for the period from 2025 through 2029.

Additional News

Sempra has announced plans to sell Ecogas México, S. de R.L. de C.V., the owner of three utility franchises providing natural gas distribution services in Mexico, along with a minority stake in Sempra Infrastructure Partners. These transactions are expected to be completed over the next 12-18 months and are anticipated to be accretive to the company's earnings-per-share, while enhancing its credit profile. Sempra also increased its annualized dividend to $2.58 per share, marking the 15th consecutive year of increases. Additionally, Sempra's Texas subsidiary, Oncor, is executing a $36.1 billion five-year capital plan, reflecting substantial growth in the Texas energy market. These developments represent key strategic moves aimed at optimizing Sempra’s portfolio and driving long-term value creation for stakeholders.