SREA offers a 7.01% current yield and discounted par upside, supported by regulated utilities but constrained by leverage, wildfire exposure and interest-deferral risk.
Overview
Sempra is a San Diego-based North American energy infrastructure holding company serving approximately 40 million consumers through regulated electric and natural gas networks in California and Texas, alongside LNG and clean-energy assets. Its SDG&E, SoCalGas and 80.25%-owned Oncor franchises function as entrenched regional monopolies, with cost-of-service regulation linking revenue and authorized returns to rate-base investment. **The core financial trajectory is improving even with top-line pressure:** Q2 2026 revenue was $2,997 million versus $3,000 million, but GAAP net income increased to $942 million from $519 million and adjusted EPS rose 30.3% to $1.16, beating consensus by 12.6%. Management affirmed 2026 adjusted EPS guidance of $4.80–$5.30, 2027 guidance of $5.10–$5.70 and 7%–9% long-term growth. For SREA, the $25-par 5.750% junior subordinated note traded at $20.50 on August 21, 2026, offering a 7.01% current yield and 18% discount to par. Near-term catalysts are the late-2026 KKR transaction, approximately $9 billion debt deconsolidation, Oncor rate-base growth and eventual data-center approvals, offset by wildfire, leverage and interest-deferral risks.