Sempra (SRE) Earnings & Analysis

Latest quarter

Sempra reported Q2 FY2026 revenue of $3.0 billion, compared with the consensus of $3.2 billion, while adjusted EPS of $1.16 exceeded the consensus of $1.01 by 14.9%. The company reported diluted EPS of $1.21, compared with $0.71 in Q2 FY2025, and said GAAP earnings rose to $796 million from $461 million.

The filing shows revenue was $3.0 billion, down 0.10% from a year earlier. Sempra reported gross margin of 96.4%, versus 88.0% a year earlier, and operating margin of 27.8%, versus 19.5%. The company reported free cash flow of −$918.0 million, compared with −$1.5 billion a year earlier.

Sempra attributed higher second-quarter equity earnings principally to Oncor Holdings, citing rate updates reflecting higher invested capital and increases related to the UTM and SRP. The filing said Sempra’s electric revenues increased $127 million (12%), while natural-gas revenues decreased $106 million (7%). Sempra also reported that energy-related-business revenue declined $24 million (5%), principally reflecting an LNG storage and regasification agreement modification that ended in December 2025 and lower natural-gas prices and volumes in transport and storage optimization.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Jeff Martin said the pending sale of a 45% equity stake in SI Partners was expected to close later in the third quarter. He said the transaction was intended to simplify Sempra’s business model, recycle capital into regulated utilities, displace the need for common equity in the current base capital plan and deconsolidate close to $9 billion of debt. Martin also said Sempra Infrastructure had received a critical regulatory approval for the Ecogas sale and that the transaction was on track to close later that month.

On Texas investment, Martin said Oncor was executing a five-year $47.5 billion base capital plan and had $10 billion of incremental capital opportunities through 2030. He identified $4.0 billion of North and Central Texas transmission upgrades endorsed by ERCOT, $3.0 billion of non-Permian Basin reliability-plan projects and about $3.0 billion expected in a future system-resiliency-plan filing. Martin said Oncor expected to update its five-year plan on the fourth-quarter call, and he said the update was not expected to include Batch Zero investment.

Analysts asked about large-load interconnection and data-center-related investment. Martin said 44 gigawatts of large-load requests were expected to be eligible in Batch Zero and that approximately 8 gigawatts were already connected and continuing to ramp toward full utilization. He said Batch Zero-related transmission spending would be incremental to Oncor’s base plan and identified incremental opportunities if ERCOT determined that additional transmission was required. Martin said the company did not expect greater definition of Batch Zero-related capital until later in 2027.

Justin Bird said planned maintenance after ECA LNG Phase 1 exported its first cargo identified damage to equipment connected to mixed-refrigerant compressors. Bird said the company was working with its EPC contractor and equipment manufacturer on the root cause and remediation plan, expected substantial completion in Q4 2026 and did not anticipate an additional delay after that.

Karen Sedgwick said Sempra’s focus included closing the SI Partners transaction, strengthening the balance sheet after closing and advancing its $65.0 billion capital plan. She said Sempra’s goal was for Texas to comprise more than 60% of total rate base in 2030.

Guidance

Sempra updated its FY2026 GAAP EPS guidance to $5.02–$5.55, reflecting actual results through Q2 FY2026. The company reaffirmed FY2026 adjusted EPS guidance of $4.80–$5.30, FY2027 adjusted EPS guidance of $5.10–$5.70 and projected long-term EPS growth of 7% to 9%.