SRE

Q4 2025

Date: 2026-02-26Rank: #41Forward Promise: bullish

Sempra reported Q4 2025 adjusted EPS of $1.28 and full-year adjusted EPS of $4.69, meeting the high end of guidance. The company announced a record $65 billion capital plan for 2026-2030 (up 17%), driving an 11% rate base CAGR and a 2030 EPS outlook of $6.70-$7.50. Key strategic moves include the sale of a 45% stake in Sempra Infrastructure Partners for $10 billion and a comprehensive rate case settlement at Oncor. Management emphasized a shift to 95% regulated earnings by 2027, eliminating the need for common equity issuance to fund growth.

Bullishness Score

90.29

μ Mean

95.82

σ Uncertainty

1.84

Forward Promise

8.2

Management Tone

Management exhibited high confidence and assertiveness throughout the call, contrasting past uncertainty with current visibility. They frequently used phrases like 'what a difference a year makes' and 'bulletproof base capital plan' to emphasize improved execution and reduced risk. The tone shifted from explaining past restructuring in prepared remarks to aggressively defending growth visibility and regulatory strategy during Q&A.

Confidence: HIGH — Management provided specific multi-year guidance, detailed capital plans, and openly discussed 'flexing' into the upper end of guidance, signaling strong conviction in their execution capabilities.

Strategic Signals

Sempra is aggressively pivoting toward a pure-play utility model, targeting 95% regulated earnings by 2027. This de-risking is a critical strategic shift, moving away from the volatility of LNG development toward the stability of utility returns. The sale of a 45% stake in Sempra Infrastructure Partners for $10 billion validates this strategy and provides capital to fund growth without equity dilution.

The company is prioritizing capital allocation to Texas, specifically Oncor, which is projected to grow rate base at an 18% CAGR. This focus is driven by massive transmission needs and data center demand. Management noted that Oncor's service territory has some of the highest concentration of AI-related growth, positioning Sempra as a key enabler of the digital economy.

Regulatory visibility has significantly improved, removing a major overhang on the stock. The settlement at Oncor updates the test year to 2024 and provides clarity through 2030. In California, the passage of SB 254 strengthens wildfire fund stability, reducing tail-risk for investors.

Management highlighted a 'bulletproof' capital plan where 70% of Oncor's spend is on transmission, which is less contingent on single customer loads than distribution. This structure allows them to capture the upside from data centers (currently 273 GW in the queue) while maintaining a base level of growth that is largely independent of specific commercial outcomes.

Key Metrics

Q4 2025 Adjusted EPS$1.28-14.7% YoY

FY 2025 Adjusted EPS$4.69+0.9% YoY

FY 2025 GAAP EPS$2.75-37.8% YoY

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

2030 EPS Outlook$6.70 - $7.50New Guidance

Oncor Rate Base CAGR18%2026-2030

Sempra Total Rate Base CAGR11%2026-2030

Guidance

2026 Adjusted EPS: $4.80 - $5.30

2027 Adjusted EPS: $5.10 - $5.70

2030 Adjusted EPS: $6.70 - $7.50

Long-term EPS Growth: 7% - 9%

Dividend Growth: 2% - 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 toward a 95% regulated earnings profile, combined with a massive $65 billion capital plan heavily weighted toward low-risk transmission in Texas, provides exceptional visibility. The 2030 EPS outlook of $6.70-$7.50 implies a 7-9% CAGR that stands out in the sector. Crucially, management has de-risked this growth by securing regulatory settlements in Texas and strengthening the balance sheet via the Sempra Infrastructure Partners transaction. The current valuation does not fully reflect the upside potential from the $9B in incremental opportunities or the explosive data center demand in Oncor's service territory. With management exuding confidence and providing granular data to support their guidance, the risk/reward skew is highly attractive.

Forward Promise

Overall: 8.2 · bullish

High confidence backed by specific multi-year visibility and capital deployment.

Management provided a robust 2030 outlook supported by a 'bulletproof' capital plan and specific regulatory milestones, signaling a durable high-growth phase.

Red Flags

While management touted the $9 billion in upside opportunities, they admitted these are currently outside the base plan. Investors should be wary of counting this growth until it is formally approved, as regulatory hurdles for transmission projects can be significant. The guidance range of $6.70-$7.50 for 2030 is wide, leaving room for execution missteps.

California's growth profile is moderating, with 2027 earnings growth reflecting the impact of attrition from the prior GRC. While management framed this as 'complementary' to Texas growth, it highlights a structural challenge in the California utility market where capital deployment is constrained by affordability and regulatory processes.

The 'batch zero' process in ERCOT for interconnecting data centers remains unresolved. Management noted that outcomes here are currently categorized as incremental upside rather than base plan growth. If ERCOT's stakeholder process fails to produce a viable path for these large loads, growth expectations could need to be tempered.

Despite the strong guidance, management acknowledged that the 2030 outlook assumes the successful closing of the Sempra Infrastructure Partners transaction and the finalization of the Oncor settlement. These are critical pending items that, if delayed, could impact the timing of their de-leveraging and capital allocation plans.

Macro Insights

Energy Demand / AI: Management highlighted that Oncor's territory has the highest concentration of AI-related data center growth in the US, with 273 GW in the queue, suggesting a sustained structural demand driver for electricity infrastructure.

Regulatory Environment: The passage of SB 254 in California and the comprehensive settlement at Oncor indicate a trend toward constructive regulatory frameworks that support infrastructure investment and wildfire mitigation.

Infrastructure Supply Chain: Analysts raised concerns about supply chain challenges (labor, transformers) impacting data center build-outs, though management noted they are working multiple avenues to mitigate delays.