Sempra is an investor-owned energy infrastructure company operating regulated utilities and gas midstream assets with a cash-generative but capital-intensive financial profile.
The company is performing well on cash generation and reported profitability: trailing twelve‑month operating cash flow stood at $4.91B versus trailing net income of $2.07B, and free cash flow margin is reported at 30.9%, indicating strong cash conversion (see Earnings Quality Analysis and Revenue & Net Income).
Reported profitability metrics are also elevated, with a net profit margin of 15.0% and a very high gross margin of 97.2% in the most recent period, while diluted EPS has risen to $3.17 (period end 2025‑12‑31) and revenue per share rebounded to $25.25 (2026‑03‑31), including a 1‑year revenue‑per‑share growth of 57.9% (see EPS Diluted & Revenue per Share and Profit Margin Trends).
Leverage and liquidity are within conventional ranges for the sector with debt‑to‑equity of 0.9568 and a current ratio of 1.5912.
Areas of concern include significant and growing investing outflows and volatility in top‑line flows. Investing cash flow has moved from about -$5.04B (2022 TTM) to -$12.54B in the latest TTM, reflecting materially higher capital deployment (see Strategic Capital Allocation).
Revenue and quarterly revenues per share have shown large swings — quarterly revenue ranged from $215.0M (2025‑09‑30) to $9.63B (2025‑12‑31), and revenue per share hit a trough of $12.09 (2025‑09‑30) before recovering to $25.25 — underscoring operational and timing volatility in recent periods (see Revenue & Net Income and EPS Diluted & Revenue per Share).
Return on equity has declined versus earlier history, at 6.6% most recently (2025‑12‑31), down from 8.2% in 2010, which signals modest shareholder returns relative to earnings scale (see Return on Equity (ROE)).
The foundation of business quality and long-term value creation
SEMPRA's revenue history in the chart shows material quarter-to-quarter variability over the recent period. After multi-billion-dollar quarters in 2024 (ranging roughly $2.8B–$3.8B), revenue moved through a set of larger swings in 2025: $3.02B (2025-06-30), a pronounced drop to $215.0M (2025-09-30), a large increase to $9.63B (2025-12-31), and then a return to $3.65B in the most recent quarter (2026-03-31). Earlier years also show occasional large spikes (for example $6.83B on 2023-12-31), indicating intermittent significant deviations from the multi-billion-dollar baseline.
Net income entries are sparser but show recent positive levels: $919.0M on 2025-03-31 and $1.15B on 2025-12-31, with an earlier high of $1.46B on 2021-12-31. The most recent reported revenue was $3.65B (period ending 2026-03-31) and the most recent reported net income was $1.15B (period ending 2025-12-31).
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Apr 2025 to Mar 2026, Sempra generates $16.52B in revenue. The waterfall below shows how revenue flows through various expense categories.
Period Information
Report Type: Annual (10-K)
Period: Apr 2025 to Mar 2026
Revenue composition by disclosure category for the latest period
Not available in the provided excerpt. The Item 1 (Business) section, which explicitly describes the company’s product and service lines and revenue sources, is not included in the text provided.
The excerpt explicitly refers to “utility customers” and to the registrants San Diego Gas & Electric Company and Southern California Gas Company as entities in the combined filing.
The excerpt also explicitly refers to “third parties” in the context of contracts and commitments and to regulatory bodies as counterparties whose decisions affect the business.
The excerpt explicitly references operations, regulators, or markets in the United States and Mexico.
The excerpt explicitly references specific U.S. states and regions, including California and Texas, and mentions Los Angeles County in the context of wildfires.
The excerpt explicitly names Mexican federal agencies and laws, indicating activity or exposure in Mexican jurisdictions.
Not available in the provided excerpt. The Item 1 (Business) section is required for explicit statements about distribution methods or sales channels.
Not available in the provided excerpt. The Item 1 (Business) section is required for explicit statements distinguishing recurring from one-time revenue.
The excerpt explicitly identifies dependence on the Wildfire Fund and the Wildfire Fund Continuation Account (in the context of recovery of wildfire-related costs).
The excerpt explicitly identifies dependence on decisions, approvals, permits, renewals, rate decisions and cost-recovery determinations by regulatory bodies, including named agencies and commissions in the U.S. and Mexico.
The excerpt explicitly identifies dependence on the success of business development efforts, construction projects, acquisitions and divestitures, including reaching final investment decisions, negotiating contractual terms, completing construction on schedule and budget, obtaining regulatory approvals, and third parties honoring contracts.
The excerpt explicitly identifies dependence on availability and cost of capital resources and the company’s ability to borrow or raise capital on acceptable terms, including potential impacts from credit-rating actions and instability in capital markets.
The excerpt explicitly identifies exposure to litigation, arbitration, property disputes, audits, investigations and other legal or regulatory proceedings.
The excerpt explicitly identifies dependence on insurance and the ability to recover costs from insurers, noting that some costs may not be recoverable through insurance, regulatory mechanisms or the Wildfire Fund.
The excerpt explicitly identifies exposure to cybersecurity threats and disruptions, including ransomware and attacks on systems or third-party systems.
The excerpt explicitly identifies dependence on the availability and cost of natural gas, storage and transportation capacity and the potential for disruptions in those systems.
The excerpt explicitly identifies exposure to changes in laws, regulations, policies and political or economic factors affecting trade, tariffs, taxation, energy industry rules, and climate-related or decarbonization policies.
The excerpt explicitly identifies exposure to macroeconomic volatility, including inflation, interest rates, commodity prices and foreign currency exchange rates.
The excerpt explicitly references regulatory and governance constraints that may affect dividend distributions for an affiliate (Oncor).
Analyzing long-term margin stability and competitive positioning
SEMPRA’s reported margins are high across the history shown, with a clear upward shift in the most recent observations. Gross margin moved from 82.0% at the 2022 year-end observation to 97.2% at the 2025 year-end, while operating margin is recorded at 101.6% in 2025 compared with the dataset’s earlier 97.6% in 2010. Net profit margin has trended higher as well, rising to 15.0% at 2025 year-end from 11.4% in the 2011 and 2021 observations. Earlier periods show gross margins near 99% in 2009–2010 and more variability in other years.
The most recent trailing twelve‑month margins are at or near the highest levels in the series: gross margin 97.2%, operating margin 101.6%, and net profit margin 15.0% (all period end 2025-12-31).
Understanding Profit Margins
Between Apr 2025 and Mar 2026, Sempra converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Over the most recent periods, SEMPRA’s trailing twelve-month operating cash flow remains higher than trailing net income. Operating cash flow declined from a peak of $6.22B in the 2023 TTM observation to $4.91B in the 2024 TTM observation, while net income has increased to $2.07B by the 2025 TTM observation. The gap between cash generated from operations and reported net income is sizable in the latest data points, with operating cash flow exceeding net income.
indicating volatility over the multi‑year series. Net income shows a longer-term rise from $739.0M in the 2010 TTM and $1.36B in the 2011 TTM to $1.46B in the 2021 TTM and $2.07B in the 2025 TTM. The most recent Net Income (TTM) was $2.07B (period ending 2025-12-31) and the most recent Operating Cash Flow (TTM) was $4.91B (period ending 2024-12-31).
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
SEMPRA's reported return on equity has declined in the available record: the most recent trailing twelve-month ROE for the period ending 2025-12-31 is 6.6%, down from 8.2% at the period ending 2010-12-31. The most recent quarter shows ROE at a lower level compared with the earlier reported point.
Only two data points are provided (2010-12-31: 8.2%; 2025-12-31: 6.6%), so intermediate movement is not shown on the chart; over that interval ROE fell by 1.6 percentage points. The most recent trailing twelve-month ROE was 6.6%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
SEMPRA’s trailing-twelve-month cash flows show a marked increase in investing outflows in the most recent data, while operating cash generation rose sharply into 2023 and then moderated. Investing cash flow moved from roughly -$5.04B (2022 TTM) to -$8.72B (2023 TTM) and reached -$12.54B in the latest 2025 TTM, indicating progressively larger net cash used in investing activities. Operating cash flow increased to $6.22B in the 2023 TTM before declining to $4.91B in the 2024 TTM.
Financing cash flow has been positive in the recent TTMs, falling from $3.78B in 2022 to $2.42B in 2023 and then rising to $2.97B in the TTM ending 2024-03-31. The most recent values are: Operating Cash Flow (TTM) $4.91B; Investing Cash Flow (TTM) -$12.54B; Financing Cash Flow (TTM) $2.97B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
SEMPRA's reported trailing twelve-month price-to-earnings ratio shows a low point in 2011 at 13.2x following 23.2x in 2010, then a rise to a peak of 29.6x in 2021. From that 2021 level, the ratio moved slightly lower by the most recent period, indicating a modest contraction relative to the 2021 value.
The most notable inflection points in the series are the 2011 trough (13.2x) and the 2021 peak (29.6x), with the most recent observation remaining near the higher end of the historical values provided. The most recent Price-to-Earnings (PE) ratio was 27.9x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.