Value
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.2 |
| P/S | 7.5 |
| EV/EBITDA | 1.4 |
| Fwd P/E | 7.9 |
| PEG | 8.5 |
| Analyst target | 6.0 |
- ▸Forward P/E: 15.4x
- ▸PEG: 0.75
SRE · Why this verdict
Why DBA Sempra (SRE) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.9/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
DBA Sempra has beaten earnings estimates in 3 of the last 4 quarters and displays strong price momentum with rising on-balance volume, but free cash flow is severely negative at -1,444% of net income, it operates at the nexus of California and Texas regulatory environments, and a put-to-call ratio of 2.58 signals elevated hedging activity.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow is -1,444% of net income — the most severe cash quality red flag in the scoring model — indicating that Sempra is in an extremely capital-intensive investment phase where cash outflows for infrastructure dwarf reported accounting profits by a factor of roughly 14. Quality breakdown | Free cash flow deficit as a percentage of net income improves toward -500% or better within the next 18 months as large infrastructure projects (likely LNG or utility expansion) move from construction to revenue generation, reducing the cash burn relative to earnings. | ↑Improving |
| CounterAt -1,444% of net income, the capital expenditure requirement is so large that it likely reflects multi-year infrastructure commitments (LNG facilities, grid expansion) that will not moderate quickly; Sempra may need to issue equity or increase debt to fund this program, diluting existing shareholders. | ||
Sempra has beaten analyst earnings estimates in 3 of the last 4 quarters with an average positive surprise of 8.9%, including a 21.7% beat in November 2025 and a 9.2% beat in February 2026, demonstrating consistent outperformance of consensus projections for a large diversified utility. Earnings | Earnings beats continue in at least 3 of the next 4 quarters with average surprise above 5%, confirming that the regulatory rate recovery cycle is translating reliably into reportable earnings. | ↑Improving |
| CounterRevenue is declining at -4% year-over-year despite earnings beats, suggesting that regulatory rate increases are offsetting volume declines or that non-recurring items are boosting reported earnings above the underlying run-rate. | ||
Sempra's momentum score of 7.7 out of 10 is strong for a utility, with rising on-balance volume, a positive moving average convergence-divergence reading, and the stock trading above its 200-day moving average, suggesting institutional buyers are net purchasers despite the headline quality concerns. Momentum breakdown | On-balance volume continues rising for at least 6 of the next 12 months and the stock holds above its 200-day moving average, confirming that institutional demand is absorbing any selling pressure from the free-cash-flow concerns. | ↑Improving |
| CounterStrong price momentum in a utility that has essentially reached its analyst price target (only 1.3% upside remaining) may simply reflect prior buying that is already fully priced in; the asymmetry of 0.25 upside-to-downside implies the market has already recognized the recovery. | ||
Substantially all of Sempra's regulated utility operations are in California and Texas — identified as the primary geographic concentration risk in the bear case — making the company's earnings trajectory highly dependent on the regulatory and legislative environments of those two states. Bear case | Regulatory proceedings in California and Texas result in rate case outcomes allowing at least 8% allowed return on equity over the next 2 annual periods, supporting the earnings beat trajectory. | Tripped↑Improving |
| CounterCalifornia utility regulation has become increasingly politicized (wildfire liability, rate affordability pressure), and Texas weatherization mandates have increased capital requirements; both regulatory environments are more uncertain than the utility sector average. | ||
Free cash flow is -1,444% of net income — the most severe cash quality red flag in the scoring model — indicating that Sempra is in an extremely capital-intensive investment phase where cash outflows for infrastructure dwarf reported accounting profits by a factor of roughly 14.
↑ImprovingQuality breakdown
- Expectation
- Free cash flow deficit as a percentage of net income improves toward -500% or better within the next 18 months as large infrastructure projects (likely LNG or utility expansion) move from construction to revenue generation, reducing the cash burn relative to earnings.
CounterAt -1,444% of net income, the capital expenditure requirement is so large that it likely reflects multi-year infrastructure commitments (LNG facilities, grid expansion) that will not moderate quickly; Sempra may need to issue equity or increase debt to fund this program, diluting existing shareholders.
Sempra has beaten analyst earnings estimates in 3 of the last 4 quarters with an average positive surprise of 8.9%, including a 21.7% beat in November 2025 and a 9.2% beat in February 2026, demonstrating consistent outperformance of consensus projections for a large diversified utility.
↑ImprovingEarnings
- Expectation
- Earnings beats continue in at least 3 of the next 4 quarters with average surprise above 5%, confirming that the regulatory rate recovery cycle is translating reliably into reportable earnings.
CounterRevenue is declining at -4% year-over-year despite earnings beats, suggesting that regulatory rate increases are offsetting volume declines or that non-recurring items are boosting reported earnings above the underlying run-rate.
Sempra's momentum score of 7.7 out of 10 is strong for a utility, with rising on-balance volume, a positive moving average convergence-divergence reading, and the stock trading above its 200-day moving average, suggesting institutional buyers are net purchasers despite the headline quality concerns.
↑ImprovingMomentum breakdown
- Expectation
- On-balance volume continues rising for at least 6 of the next 12 months and the stock holds above its 200-day moving average, confirming that institutional demand is absorbing any selling pressure from the free-cash-flow concerns.
CounterStrong price momentum in a utility that has essentially reached its analyst price target (only 1.3% upside remaining) may simply reflect prior buying that is already fully priced in; the asymmetry of 0.25 upside-to-downside implies the market has already recognized the recovery.
Substantially all of Sempra's regulated utility operations are in California and Texas — identified as the primary geographic concentration risk in the bear case — making the company's earnings trajectory highly dependent on the regulatory and legislative environments of those two states.
Tripped↑ImprovingBear case
- Expectation
- Regulatory proceedings in California and Texas result in rate case outcomes allowing at least 8% allowed return on equity over the next 2 annual periods, supporting the earnings beat trajectory.
CounterCalifornia utility regulation has become increasingly politicized (wildfire liability, rate affordability pressure), and Texas weatherization mandates have increased capital requirements; both regulatory environments are more uncertain than the utility sector average.
Per-dimension breakdown
Quality
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.2 |
| ROA | 1.3 |
| Gross margin | 4.8 |
| Op margin | 10.0 |
| Net margin | 8.4 |
| Current ratio | 5.9 |
| FCF quality | 0.0 |
| Moat | 3.9 |
| Piotroski F | 7.8 |
- ▸Strong margins: 17%
- ▸Earnings quality RED FLAG: -1213% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
6.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.5 |
| EPS growth | 10.0 |
- ▸Declining revenue: -0%
Momentum
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 2.2 |
| Volume | 4.1 |
- ▸Capitulation risk (RSI 21, below 200MA)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+0.6%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.9 |
| Analyst rating | 7.4 |
| Price target | 7.9 |
- ▸Analyst upside: 22%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $1,261,216 (0.002% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.8 |
| quality rank | 5.0 |
| growth rank | 0.0 |
- ▸Best-in-class margins
- ▸Conservative debt levels
Technical
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.2 |
| support resistance | 8.0 |
| 52w position | 7.1 |
Risk (lower is worse)
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.0 |
| days to cover | 6.7 |
| volatility | 7.0 |
| put call | 10.0 |
| implied vol | 4.8 |
| beta | 9.5 |
| debt equity | 5.9 |
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 7.5 |
| dividend safety | 4.0 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/0M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Mixed signals. Hold existing position.
Engine technical detail
verdict_path:
L4:PATH_F_HOLD_DEFAULTPassed (6)
- ASYMMETRY:1.9>=1.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:83d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:3.9<4.5
Warning (0)
none
Reward-to-Risk
1.93
Upside
+9.7%
Downside
5.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The default F-path HOLD fired without any positive-conviction gate triggering — no momentum acceleration, no quality+value crossover, no setup recognition. Highest-clear gate: ASYMMETRY:1.9>=1.5. Top dim: Risk (lower is worse) at 7.6; weakest: Peer rank at 3.5. The engine's read is one of pattern absence — no directional conviction in either direction at current asymmetry.
The strongest dimensions are Risk (lower is worse) at 7.6, Technical at 7.4, and Insider at 7.3; the weakest are Peer rank at 3.5, Momentum at 3.9, and Quality at 4.9. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of 1.93 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Beat Streak Execution
Trip ifEarnings surprise falls below -5% in at least 2 of the next 4 quarters, indicating that the execution pattern is deteriorating as capital costs or regulatory delays impact reported results.
- P2Severely Negative Free Cash Flow
Trip ifFree cash flow deficit worsens to more than -2,000% of net income in any reported quarter, indicating that capital expenditures are accelerating further beyond manageable levels.
- P3Price Momentum Volume Accumulation
Trip ifOn-balance volume falls below its 90-day moving average for more than 8 consecutive weeks, indicating institutional sellers are beginning to distribute positions.
- P4California Texas Regulatory ConcentrationTripped
Trip ifA regulatory rate case in California or Texas results in an allowed return on equity below 7%, more than 1 percentage point below sector benchmarks, signaling unfavorable regulatory outcomes.