Sempra (SRE)
California and Texas regulated utilities plus LNG infrastructure: rate base of $57B, 11% CAGR to 2030, FY2025 adjusted EPS of $4.69, derived FFO/debt of ~13.5%, payout of 55.0%, and ~$59.4B market cap.
Educational analysis for professional use. This profile is not investment advice or a recommendation to buy or sell any security, and it is not personalised.
Snapshot
Regulated Wires Plus LNG
Sempra is the regulated utilities plus LNG infrastructure hybrid: California and Texas wires-and-poles earn authorised returns; Port Arthur LNG and Cameron add non-regulated cash flows that pure wires names do not have. Rate base was $57 billion at end FY2025 (up from $50 billion in 2024), targeting 11% CAGR to $97 billion by 2030. FY2025 adjusted EPS was $4.69 (GAAP $2.75) against a 7%–9% long-term growth target.
Derived FFO/debt, funds from operations set against total debt, at ~13.5% (FFO $5,820M ÷ debt $43,176M) sits below the 14%–16%+ range this site uses as its investment-grade credit convention, so credit caps the growth read. High rate-base growth (11%) plus thin headroom flags periodic equity issuance on that same convention, alongside AEP (Moody's 13.9%) and Duke (14.8% vs 15% target).
Business Overview
Sempra's regulated slice spans San Diego Gas & Electric and Southern California Gas in California, and Oncor Electric Delivery in Texas, majority-owned rather than consolidated for rate-making purposes but central to the growth plan. The $57 billion rate base is the filed FY2025 figure from the February 2026 investor presentation.
LNG infrastructure (Port Arthur LNG development, Cameron LNG joint venture) generates earnings outside the rate-base × allowed ROE formula. Contracted LNG margins depend on offtake agreements and global gas prices, not CPUC or PUCT cost-of-service proceedings. Split regulated vs non-regulated earnings before applying a single utility P/E.
Oncor's 9.75% authorised ROE comes from the PUCT order filed 17 April 2026. California authorised ROEs at 9.93% sit near the CPUC's "close to 10 percent" band. SDG&E FERC transmission at 10.10% tops the state-regulated lines. The allowed vs earned ROE guide clusters these around the 9.70% industry median.
How Regulated Utility Economics Work Here
11% rate-base CAGR is among the fastest in the comp set, close to Dominion's 11.9% and ahead of AEP's ~10%. Sempra's ~13.5% FFO/debt, below that 14%–16%+ convention, is the credit constraint the P/E premium guide and the primer's Valuation Summary sheet weigh against that growth rate.
Adjusted EPS growth of 7%–9% (2030 outlook $6.70–$7.50 per the February 2026 presentation) embeds LNG contribution alongside regulated compounding. GAAP EPS of $2.75 in FY2025 shows the gap between adjusted utility earnings and one-time items; utility analysis uses $4.69 adjusted.
Payout at 55.0% on adjusted EPS ($2.58 declared) is the lowest in the comp set on a stated basis, deliberately preserving cash for capex and deleveraging. The FFO/debt guide lists Sempra at ~13.5% derived against peer actuals from 14.8% (Duke, Southern) to 19.0% (NextEra). Agency scorecards use CFO pre-WC/debt, cash flow from operations before working-capital changes measured against debt, on Moody's Standard Grid (13%–22% at Baa).
The rate base guide includes Sempra's $57 billion filed base. Growth from $50 billion in 2024 to $57 billion in 2025 is roughly 14% year on year on dollars; the 11% figure is the forward 2026–2030 plan CAGR to $97 billion.
Valuation Framework
Sempra requires a sum-of-the-parts mindset. Regulated utilities on rate-base growth and allowed ROE; LNG on contracted cash flows and project execution (Port Arthur trains, Cameron volumes). A single consolidated P/E blends unlike risk profiles.
On the 9 June 2026 close of $90.87 against FY2025 adjusted EPS of $4.69, trailing P/E was about 19.4x.
Equity issuance is part of the base case when 11% RB CAGR meets ~13.5% FFO/debt. That convention flags names with RB CAGR >9% and FFO/debt within 50 bps of ~14%. Sempra at ~13.5% derived is inside that flag. Dilution offsets part of the EPS growth from rate-base compounding.
Key Risks
Credit and funding. ~13.5% derived FFO/debt below the 14%–16%+ screen limits debt-funded capex. Equity raises are part of the base funding case on that screen.
California regulatory risk. Wildfire liability and gas system safety can move allowed ROE and rate-base recovery; cost-of-capital proceedings add another lever independent of Texas growth.
LNG project execution. Port Arthur LNG construction and Cameron operational performance drive non-regulated earnings. Delay or cost overrun hits adjusted EPS without regulatory recovery mechanisms.
Oncor minority structure. Oncor is majority-owned; Texas growth is central to the 11% plan but Sempra does not consolidate Oncor like a wholly owned operating company. Structural complexity affects both rate-base disclosure and parent-level credit.
What the Screening Shows
Against the Regulated Utilities Sector Primer thresholds:
- Rate base: $57B filed FY2025; 11% CAGR to $97B by 2030, among the fastest in the comp set.
- Allowed ROE: Oncor 9.75%, SDG&E/SoCalGas 9.93%, FERC 10.10%. Cluster around median; no FPL-style settlement band.
- EPS growth: 7%–9% long-term off $4.69 adjusted. Mid-range vs peers; LNG adds volatility.
- FFO/debt: ~13.5% derived. Below IG screen; equity-issuance flag active with 11% RB CAGR.
- Payout: 55.0% on adjusted EPS. Lowest stated payout in comp set; retention for capex and credit repair.
The open question is whether 11% rate-base CAGR can be funded without further equity issuance once derived FFO/debt sits at ~13.5%, and whether LNG execution at Port Arthur and Cameron justifies blending regulated and non-regulated cash flows in one multiple. Credit repair toward the 14%–16%+ screen is the swing item; Oncor and the California utilities carry the regulated earnings path.
Regulated Utilities Sector Primer
Earned net income less the growth in regulated equity capital drives the free-cash-flow-to-equity build, priced off rate base and allowed ROE, screened against payout, P/E and FFO-to-debt.
The Excel model is the primer's two archetype builds live across 13 sheets: free cash flow to equity, earned net income less the increase in the regulated equity book, discounted at the cost of equity, on rate base, equity ratio and allowed ROE, with the rate-base roll-forward, the FFO-to-debt headroom screen and the funding plan on their own sheets. Change the rate-base growth, the allowed ROE or the cost of equity and the value per share moves; the credit and funding sheets update alongside it.