SOCGM

Q4 2025

Date: 2026-02-26Rank: #99Forward Promise: very_bullish

Sempra reported Q4 2025 adjusted EPS of $1.28, with full-year adjusted EPS reaching a record $4.69, at the high end of guidance. The company announced a record $65 billion capital plan for 2026-2030 (up 17%), driven primarily by Oncor transmission expansion, projecting an 11% rate base CAGR. Sempra introduced 2030 EPS guidance of $6.70-$7.50, implying 7-9% long-term growth, and affirmed 2026 guidance of $4.80-$5.30. Key strategic moves include the pending sale of a 45% stake in Sempra Infrastructure Partners for $10 billion to de-risk the portfolio and shift earnings mix to 95% regulated by 2027.

Bullishness Score

85.62

μ Mean

90.84

σ Uncertainty

1.74

Forward Promise

8.5

Management Tone

Management exhibited high confidence and a sense of vindication regarding the company's strategic pivot, frequently emphasizing the 'quality and certainty' of future cash flows and the strength of the Texas footprint. The tone shifted from defensive in prior years to assertive, highlighting a 'foundational' 2025 that sets up a 'robust growth story' with no need for equity issuance.

Confidence: HIGH — Management provided specific long-term guidance through 2030, detailed multi-year capital plans with upside visibility, and repeatedly used assertive language about the 'bulletproof' nature of their base plan and the 'complementary' nature of their Texas and California assets.

Strategic Signals

Sempra is aggressively pivoting its growth engine to Texas, specifically Oncor, which is projected to grow rate base at an 18% CAGR and surpass Sempra California as the majority of the company's rate base by 2030. This shift is supported by a massive transmission build-out, representing 70% of Oncor's capex, to service historic load growth from data centers and AI.

The company is executing a major capital recycling strategy, selling non-core assets and a 45% stake in Sempra Infrastructure Partners for $10 billion. This transaction is critical for fortressing the balance sheet, deconsolidating infrastructure debt, and funding the $65 billion utility capital plan without issuing common equity.

Management introduced specific 2030 EPS guidance ($6.70-$7.50), signaling a transition to a 'pure play' utility profile with 95% regulated earnings by 2027. This reduces portfolio risk and likely supports a valuation re-rating, as emphasized by the CEO's focus on simplifying the business model.

Oncor's capital plan includes a significant 'upside opportunity' of $10 billion (Sempra share $8B) outside the base plan, largely driven by non-Permian transmission projects and data center interconnections. Management has a track record of converting these 'incremental' opportunities into the base plan, offering potential for earnings outperformance.

Key Metrics

Q4 2025 Adjusted EPS$1.28-14.7% YoY

FY 2025 Adjusted EPS$4.69+0.9% YoY

2026-2030 Capital Plan$65 Billion+17% vs prior plan

2030 EPS Guidance$6.70 - $7.50New Long-term Outlook

Oncor Rate Base CAGR18%2026-2030

Sempra Infrastructure Sale$10 Billion45% Stake Sale

Guidance

2026 Adjusted EPS: $4.80 to $5.30

2027 Adjusted EPS: $5.10 to $5.70

2030 Adjusted EPS: $6.70 to $7.50

Long-term Growth: 7% to 9%

Dividend Growth: 2% to 4% annually

Bottom Line

Price Target: N/A

Sempra has successfully executed a strategic pivot that positions it as a premier growth utility. The shift to a 95% regulated earnings mix, combined with a record $65B capital plan heavily weighted toward low-risk transmission in Texas, provides exceptional visibility through 2030. The company's ability to fund this growth without equity issuance, supported by the Sempra Infrastructure Partners monetization, significantly de-risks the investment thesis. While California growth moderates, the Texas tailwind is powerful, with Oncor's rate base growing at 18% CAGR and a massive, high-quality data center queue offering additional upside. The 2030 EPS guidance of $6.70-$7.50 appears conservative given the specific upside opportunities identified by management, suggesting potential for further positive revisions as execution milestones are met.

Forward Promise

Overall: 8.5 · very_bullish

Confident visibility into 2030 with massive upside leverage in Texas.

Management provided a masterclass in visibility, outlining a de-risked, utility-centric growth profile backed by specific data on demand and capital allocation.

Red Flags

While the Texas growth story is robust, California's growth profile is moderating, with 2027 earnings growth reflecting 'approved attrition' from the prior GRC. Management admitted to working 'aggressively' on efficiencies, implying the California business may face structural headwinds or regulatory compression relative to the high-growth Texas utility.

The 2030 guidance midpoint ($7.10) implies a growth rate that essentially tracks the long-term 7-9% target, suggesting that despite the massive capital increase and asset sales, the company is not yet guiding to significant accretion above historical growth run rates.

The realization of the $9 billion (Sempra share) in upside capital opportunities is contingent on external factors such as ERCOT approvals for transmission projects and the successful 'batch zero' process for data centers. While management is confident, these are regulatory dependencies that could delay or defer growth.

The company's heavy reliance on the successful closing of the Sempra Infrastructure Partners transaction ($10 billion sale) to achieve 95% regulated earnings and improve credit metrics introduces execution risk. Any delay or renegotiation could impact the balance sheet 'fortressing' narrative.

Macro Insights

Energy Demand / AI: Management confirmed that the AI/data center driven power demand boom is real and concentrated in their Texas footprint, with 273GW in the queue and 38GW of 'high certainty' load already exceeding the system's current peak.

Regulatory Environment: The settlement in Texas provides regulatory certainty through 2030, while California's SB 254 wildfire fund legislation reduces tail risk for the California utilities.

Infrastructure Supply Chain: Analysts raised concerns about supply chain/labor constraints impacting data center build-outs, though management noted they are working multiple avenues (ERCOT, RPG, interim contracts) to mitigate these risks.