Will This New Rating Help Sempra Energy (SRE) Stock Today?
Story updated at 9:50 a.m. to reflect market activity.
NEW YORK ( TheStreet) -- UBS initiated its coverage of Sempra Energy
Shares of Sempra gained 0.6% to $97.02 in morning trading.
The firm set a price target of $106 for the energy company. UBS analysts Julien Dumoulin-Smith, Michael Weinstein, and Pau Zimbardo noted that Sempra is involved "in every attractive angle of energy infrastructure, with the bulk of its growth tied to LNG exports." The underlying core utility business in California is also well-positioned according to the analysts.
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Separately, TheStreet Ratings team rates SEMPRA ENERGY as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate SEMPRA ENERGY (SRE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SRE's revenue growth has slightly outpaced the industry average of 2.2%. Since the same quarter one year prior, revenues slightly increased by 1.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $454.00 million or 37.57% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.77%.
- SEMPRA ENERGY' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SEMPRA ENERGY increased its bottom line by earning $4.02 versus $3.49 in the prior year. This year, the market expects an improvement in earnings ($4.45 versus $4.02).
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Multi-Utilities industry and the overall market, SEMPRA ENERGY's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: SRE Ratings Report