Intrinsic value of Sempra Energy - SRE

Previous Close

$113.02

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$113.02

 
Intrinsic value

$30.65

 
Up/down potential

-73%

 
Rating

str. sell

 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of SRE stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 28.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  0.12
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
Revenue, $m
  0
  11,037
  11,907
  12,811
  13,751
  14,727
  15,742
  16,796
  17,893
  19,034
  20,222
  21,459
  22,747
  24,090
  25,491
  26,952
  28,477
  30,070
  31,733
  33,473
  35,291
  37,193
  39,183
  41,265
  43,446
  45,729
  48,120
  50,626
  53,251
  56,003
  58,887
Variable operating expenses, $m
 
  9,031
  9,724
  10,445
  11,193
  11,971
  12,780
  13,620
  14,494
  15,403
  16,350
  17,099
  18,126
  19,196
  20,312
  21,476
  22,691
  23,960
  25,286
  26,672
  28,121
  29,636
  31,222
  32,881
  34,618
  36,438
  38,343
  40,340
  42,432
  44,625
  46,923
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  8,637
  9,031
  9,724
  10,445
  11,193
  11,971
  12,780
  13,620
  14,494
  15,403
  16,350
  17,099
  18,126
  19,196
  20,312
  21,476
  22,691
  23,960
  25,286
  26,672
  28,121
  29,636
  31,222
  32,881
  34,618
  36,438
  38,343
  40,340
  42,432
  44,625
  46,923
Operating income, $m
  1,564
  2,006
  2,183
  2,367
  2,557
  2,756
  2,962
  3,176
  3,399
  3,631
  3,872
  4,360
  4,622
  4,894
  5,179
  5,476
  5,786
  6,109
  6,447
  6,801
  7,170
  7,557
  7,961
  8,384
  8,827
  9,291
  9,777
  10,286
  10,819
  11,378
  11,964
EBITDA, $m
  2,876
  3,593
  3,876
  4,171
  4,477
  4,794
  5,125
  5,468
  5,825
  6,197
  6,583
  6,986
  7,405
  7,843
  8,299
  8,774
  9,271
  9,789
  10,331
  10,897
  11,489
  12,108
  12,756
  13,434
  14,144
  14,887
  15,666
  16,481
  17,336
  18,232
  19,171
Interest expense (income), $m
  532
  587
  687
  790
  897
  1,008
  1,124
  1,244
  1,369
  1,498
  1,633
  1,774
  1,920
  2,073
  2,232
  2,397
  2,570
  2,751
  2,939
  3,136
  3,342
  3,557
  3,782
  4,018
  4,264
  4,522
  4,793
  5,076
  5,372
  5,683
  6,009
Earnings before tax, $m
  1,830
  1,419
  1,496
  1,577
  1,660
  1,748
  1,838
  1,932
  2,031
  2,133
  2,239
  2,586
  2,701
  2,822
  2,947
  3,078
  3,215
  3,358
  3,508
  3,664
  3,828
  3,999
  4,178
  4,366
  4,563
  4,768
  4,984
  5,210
  5,447
  5,695
  5,956
Tax expense, $m
  389
  383
  404
  426
  448
  472
  496
  522
  548
  576
  604
  698
  729
  762
  796
  831
  868
  907
  947
  989
  1,034
  1,080
  1,128
  1,179
  1,232
  1,287
  1,346
  1,407
  1,471
  1,538
  1,608
Net income, $m
  1,371
  1,036
  1,092
  1,151
  1,212
  1,276
  1,342
  1,411
  1,482
  1,557
  1,634
  1,888
  1,972
  2,060
  2,152
  2,247
  2,347
  2,452
  2,561
  2,675
  2,794
  2,919
  3,050
  3,187
  3,331
  3,481
  3,638
  3,803
  3,976
  4,158
  4,348

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  349
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  47,786
  51,337
  55,382
  59,587
  63,957
  68,497
  73,216
  78,122
  83,224
  88,532
  94,056
  99,808
  105,801
  112,047
  118,561
  125,357
  132,450
  139,858
  147,598
  155,686
  164,144
  172,989
  182,245
  191,931
  202,072
  212,692
  223,815
  235,468
  247,680
  260,479
  273,895
Adjusted assets (=assets-cash), $m
  47,437
  51,337
  55,382
  59,587
  63,957
  68,497
  73,216
  78,122
  83,224
  88,532
  94,056
  99,808
  105,801
  112,047
  118,561
  125,357
  132,450
  139,858
  147,598
  155,686
  164,144
  172,989
  182,245
  191,931
  202,072
  212,692
  223,815
  235,468
  247,680
  260,479
  273,895
Revenue / Adjusted assets
  0.000
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
Average production assets, $m
  30,961
  33,499
  36,138
  38,882
  41,733
  44,696
  47,775
  50,977
  54,306
  57,769
  61,374
  65,127
  69,038
  73,113
  77,364
  81,798
  86,427
  91,261
  96,311
  101,589
  107,108
  112,880
  118,919
  125,240
  131,857
  138,787
  146,045
  153,649
  161,617
  169,969
  178,723
Working capital, $m
  -2,817
  -508
  -548
  -589
  -633
  -677
  -724
  -773
  -823
  -876
  -930
  -987
  -1,046
  -1,108
  -1,173
  -1,240
  -1,310
  -1,383
  -1,460
  -1,540
  -1,623
  -1,711
  -1,802
  -1,898
  -1,998
  -2,104
  -2,214
  -2,329
  -2,450
  -2,576
  -2,709
Total debt, $m
  17,121
  19,628
  22,569
  25,626
  28,802
  32,103
  35,534
  39,101
  42,810
  46,669
  50,685
  54,866
  59,223
  63,764
  68,500
  73,440
  78,597
  83,983
  89,609
  95,490
  101,638
  108,069
  114,798
  121,840
  129,212
  136,933
  145,019
  153,491
  162,369
  171,674
  181,428
Total liabilities, $m
  34,815
  37,322
  40,263
  43,320
  46,496
  49,797
  53,228
  56,795
  60,504
  64,363
  68,379
  72,560
  76,917
  81,458
  86,194
  91,134
  96,291
  101,677
  107,303
  113,184
  119,332
  125,763
  132,492
  139,534
  146,906
  154,627
  162,713
  171,185
  180,063
  189,368
  199,122
Total equity, $m
  12,971
  14,015
  15,119
  16,267
  17,460
  18,700
  19,988
  21,327
  22,720
  24,169
  25,677
  27,248
  28,884
  30,589
  32,367
  34,222
  36,159
  38,181
  40,294
  42,502
  44,811
  47,226
  49,753
  52,397
  55,166
  58,065
  61,101
  64,283
  67,617
  71,111
  74,773
Total liabilities and equity, $m
  47,786
  51,337
  55,382
  59,587
  63,956
  68,497
  73,216
  78,122
  83,224
  88,532
  94,056
  99,808
  105,801
  112,047
  118,561
  125,356
  132,450
  139,858
  147,597
  155,686
  164,143
  172,989
  182,245
  191,931
  202,072
  212,692
  223,814
  235,468
  247,680
  260,479
  273,895
Debt-to-equity ratio
  1.320
  1.400
  1.490
  1.580
  1.650
  1.720
  1.780
  1.830
  1.880
  1.930
  1.970
  2.010
  2.050
  2.080
  2.120
  2.150
  2.170
  2.200
  2.220
  2.250
  2.270
  2.290
  2.310
  2.330
  2.340
  2.360
  2.370
  2.390
  2.400
  2.410
  2.430
Adjusted equity ratio
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,371
  1,036
  1,092
  1,151
  1,212
  1,276
  1,342
  1,411
  1,482
  1,557
  1,634
  1,888
  1,972
  2,060
  2,152
  2,247
  2,347
  2,452
  2,561
  2,675
  2,794
  2,919
  3,050
  3,187
  3,331
  3,481
  3,638
  3,803
  3,976
  4,158
  4,348
Depreciation, amort., depletion, $m
  1,312
  1,587
  1,694
  1,804
  1,919
  2,039
  2,163
  2,292
  2,426
  2,566
  2,711
  2,626
  2,784
  2,948
  3,120
  3,298
  3,485
  3,680
  3,884
  4,096
  4,319
  4,552
  4,795
  5,050
  5,317
  5,596
  5,889
  6,196
  6,517
  6,854
  7,207
Funds from operations, $m
  2,409
  2,623
  2,786
  2,955
  3,131
  3,314
  3,505
  3,703
  3,908
  4,123
  4,345
  4,514
  4,756
  5,008
  5,271
  5,546
  5,832
  6,132
  6,444
  6,771
  7,113
  7,471
  7,845
  8,237
  8,648
  9,077
  9,527
  9,999
  10,493
  11,011
  11,554
Change in working capital, $m
  90
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -50
  -52
  -55
  -57
  -59
  -62
  -64
  -67
  -70
  -73
  -77
  -80
  -84
  -87
  -92
  -96
  -100
  -105
  -110
  -115
  -121
  -127
  -133
Cash from operations, $m
  2,319
  5,180
  2,826
  2,997
  3,175
  3,359
  3,551
  3,751
  3,959
  4,175
  4,400
  4,571
  4,815
  5,070
  5,335
  5,613
  5,902
  6,205
  6,521
  6,851
  7,197
  7,559
  7,937
  8,333
  8,748
  9,182
  9,637
  10,114
  10,614
  11,138
  11,687
Maintenance CAPEX, $m
  0
  -1,248
  -1,351
  -1,457
  -1,568
  -1,683
  -1,802
  -1,926
  -2,056
  -2,190
  -2,329
  -2,475
  -2,626
  -2,784
  -2,948
  -3,120
  -3,298
  -3,485
  -3,680
  -3,884
  -4,096
  -4,319
  -4,552
  -4,795
  -5,050
  -5,317
  -5,596
  -5,889
  -6,196
  -6,517
  -6,854
New CAPEX, $m
  -4,214
  -2,538
  -2,640
  -2,744
  -2,851
  -2,963
  -3,079
  -3,201
  -3,329
  -3,463
  -3,605
  -3,753
  -3,910
  -4,076
  -4,250
  -4,435
  -4,629
  -4,834
  -5,050
  -5,278
  -5,519
  -5,772
  -6,039
  -6,321
  -6,617
  -6,929
  -7,258
  -7,604
  -7,968
  -8,352
  -8,755
Cash from investing activities, $m
  -4,886
  -3,786
  -3,991
  -4,201
  -4,419
  -4,646
  -4,881
  -5,127
  -5,385
  -5,653
  -5,934
  -6,228
  -6,536
  -6,860
  -7,198
  -7,555
  -7,927
  -8,319
  -8,730
  -9,162
  -9,615
  -10,091
  -10,591
  -11,116
  -11,667
  -12,246
  -12,854
  -13,493
  -14,164
  -14,869
  -15,609
Free cash flow, $m
  -2,567
  1,393
  -1,165
  -1,204
  -1,244
  -1,286
  -1,330
  -1,377
  -1,426
  -1,478
  -1,534
  -1,658
  -1,721
  -1,790
  -1,863
  -1,941
  -2,025
  -2,114
  -2,209
  -2,310
  -2,418
  -2,532
  -2,654
  -2,783
  -2,919
  -3,064
  -3,217
  -3,379
  -3,550
  -3,731
  -3,921
Issuance/(repayment) of debt, $m
  1,586
  2,856
  2,941
  3,057
  3,177
  3,301
  3,431
  3,567
  3,709
  3,859
  4,016
  4,182
  4,357
  4,541
  4,735
  4,941
  5,157
  5,386
  5,626
  5,881
  6,148
  6,431
  6,729
  7,042
  7,372
  7,720
  8,087
  8,472
  8,878
  9,305
  9,754
Issuance/(repurchase) of shares, $m
  -5
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  3,200
  2,856
  2,941
  3,057
  3,177
  3,301
  3,431
  3,567
  3,709
  3,859
  4,016
  4,182
  4,357
  4,541
  4,735
  4,941
  5,157
  5,386
  5,626
  5,881
  6,148
  6,431
  6,729
  7,042
  7,372
  7,720
  8,087
  8,472
  8,878
  9,305
  9,754
Total cash flow (excl. dividends), $m
  633
  4,249
  1,776
  1,853
  1,932
  2,015
  2,101
  2,190
  2,283
  2,381
  2,482
  2,524
  2,635
  2,751
  2,872
  2,999
  3,132
  3,272
  3,417
  3,570
  3,731
  3,898
  4,075
  4,259
  4,453
  4,656
  4,869
  5,093
  5,328
  5,574
  5,833
Retained Cash Flow (-), $m
  -1,142
  -1,044
  -1,104
  -1,148
  -1,193
  -1,240
  -1,288
  -1,339
  -1,393
  -1,449
  -1,508
  -1,570
  -1,636
  -1,705
  -1,778
  -1,855
  -1,937
  -2,022
  -2,113
  -2,208
  -2,309
  -2,415
  -2,527
  -2,644
  -2,768
  -2,899
  -3,037
  -3,181
  -3,334
  -3,494
  -3,663
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  3,205
  672
  705
  739
  775
  812
  851
  891
  932
  974
  954
  999
  1,046
  1,094
  1,144
  1,196
  1,249
  1,305
  1,362
  1,422
  1,484
  1,548
  1,615
  1,685
  1,757
  1,833
  1,912
  1,994
  2,080
  2,170
Discount rate, %
 
  9.10
  9.56
  10.03
  10.53
  11.06
  11.61
  12.19
  12.80
  13.44
  14.12
  14.82
  15.56
  16.34
  17.16
  18.02
  18.92
  19.86
  20.86
  21.90
  23.00
  24.15
  25.35
  26.62
  27.95
  29.35
  30.82
  32.36
  33.97
  35.67
  37.46
PV of cash for distribution, $m
 
  2,938
  560
  529
  495
  459
  420
  380
  340
  299
  260
  209
  176
  146
  119
  95
  75
  57
  43
  32
  23
  16
  11
  7
  5
  3
  2
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Sempra Energy operates as an energy services holding company worldwide. The company’s San Diego Gas & Electric Company segment transmits and distributes electricity and/or natural gas. As of December 31, 2015, this segment had approximately 1.4 million electric meters and 873,000 natural gas meters. Its Southern California Gas Company segment transmits, distributes, and stores natural gas. As of December 31, 2015, this segment had approximately 5.9 million customer meters. The company’s Sempra South American Utilities segment provides electricity distribution services through 13,458 miles of distribution lines, 185 miles of transmission lines, and 36 substations. Its Sempra Mexico segment owns and operates a natural gas-fired power plant and a wind generation facility in Baja California, Mexico; natural gas distribution systems; natural gas pipelines and propane systems; and liquefied natural gas regasification terminals. The company’s Sempra Renewables segment develops solar electric generation facilities in Nevada, Arizona, and California, as well as develops wind electric generation facilities in Mexico. Its Sempra Natural Gas segment owns and operates a natural gas distribution utility located in Mobile and Baldwin counties in Alabama; and a natural gas distribution utility in Forrest County, Mississippi. The company primarily serves residential, commercial, and industrial customers. Sempra Energy was founded in 1998 and is headquartered in San Diego, California.

FINANCIAL RATIOS  of  Sempra Energy (SRE)

Valuation Ratios
P/E Ratio 20.6
Price to Sales 2.8
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow -14.9
Growth Rates
Sales Growth Rate 0.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 33.5%
Cap. Spend. - 3 Yr. Gr. Rate 10.4%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 111.2%
Total Debt to Equity 132%
Interest Coverage 4
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital 4.8%
Ret/ On T. Cap. - 3 Yr. Avg. 4.9%
Return On Equity 11.1%
Return On Equity - 3 Yr. Avg. 11%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 36%
EBITDA Margin - 3 Yr. Avg. 33.2%
Operating Margin 15.3%
Oper. Margin - 3 Yr. Avg. 16.6%
Pre-Tax Margin 17.9%
Pre-Tax Margin - 3 Yr. Avg. 16.2%
Net Profit Margin 13.4%
Net Profit Margin - 3 Yr. Avg. 12.4%
Effective Tax Rate 21.3%
Eff/ Tax Rate - 3 Yr. Avg. 20.3%
Payout Ratio 50.1%

SRE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SRE stock intrinsic value calculation we used $10201 million for the last fiscal year's total revenue generated by Sempra Energy. The default revenue input number comes from 2016 income statement of Sempra Energy. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our SRE stock valuation model: a) initial revenue growth rate of 8.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9.1%, whose default value for SRE is calculated based on our internal credit rating of Sempra Energy, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Sempra Energy.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of SRE stock the variable cost ratio is equal to 82%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for SRE stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Sempra Energy.

Corporate tax rate of 27% is the nominal tax rate for Sempra Energy. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the SRE stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for SRE are equal to 303.5%.

Life of production assets of 24.8 years is the average useful life of capital assets used in Sempra Energy operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for SRE is equal to -4.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $12971 million for Sempra Energy - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 251.222 million for Sempra Energy is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Sempra Energy at the current share price and the inputted number of shares is $28.4 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
PCG PG&E 67.05 228.61  str.buy
EIX Edison Interna 79.97 322.57  str.buy
VVC Vectren 59.42 87.38  buy
CLNE Clean Energy F 2.44 0.64  str.sell
DUK Duke Energy 82.50 177.37  str.buy
ETP Energy Transfe 35.93 6.53  str.sell
KMI Kinder Morgan 20.63 4.31  str.sell
UGI UGI 50.16 42.69  hold

COMPANY NEWS

▶ SDG&E Offers Tips For Safe Tree Planting This Arbor Day   [Apr-28-17 03:25PM  PR Newswire]
▶ Split results for stocks on Syria strike and weak jobs gains   [Apr-07-17 12:10PM  Associated Press]
▶ Sempra Energy To Webcast Analyst Conference April 5   [Mar-22-17 09:00AM  PR Newswire]
▶ Sempra Energy Stock Trades Ex-Dividend Tuesday   [Mar-20-17 11:22AM  Investopedia]
▶ Sempra Energys Dividend Profile, Inside Out   [Mar-15-17 07:37AM  Market Realist]
▶ [$$] How California Utilities Are Managing Excess Solar Power   [Mar-06-17 12:17AM  at The Wall Street Journal]
▶ [$$] How California Utilities Are Managing Excess Solar Power   [07:30AM  at The Wall Street Journal]
▶ Sempra Energy Appoints Two New Directors   [04:43PM  PR Newswire]
▶ [$$] Sempra Energy Increases Earnings Guidance   [10:11AM  at The Wall Street Journal]
▶ Sempra Energy Announces 2016 Earnings   [08:30AM  PR Newswire]
▶ Sempra Energy Raises Annualized Dividend By 9 Percent   [Feb-23-17 01:41PM  PR Newswire]
▶ SoCalGas Declares Preferred Dividends   [Feb-10-17 01:06PM  PR Newswire]
▶ TransCanada Corporation's 3 Biggest Growth Opportunities   [Feb-06-17 12:46PM  at Motley Fool]
▶ SoCalGas Advisory Lifted   [Jan-26-17 05:50PM  PR Newswire]
▶ SoCalGas Advisory Now in Effect   [09:45AM  PR Newswire]
▶ SoCalGas Announces "SoCalGas Advisory"   [Jan-22-17 04:41PM  PR Newswire]
▶ SDG&E President, Scott D. Drury, Begins Role   [Jan-03-17 04:36PM  PR Newswire]
▶ SoCalGas Lifts "SoCalGas Advisory"   [Dec-20-16 03:29PM  PR Newswire]
▶ SoCalGas Issues "SoCalGas Advisory"   [Dec-18-16 08:59PM  PR Newswire]
▶ Sempra Energy Declares Common Dividend   [Dec-16-16 01:07PM  PR Newswire]
▶ SDG&E Transforming Vehicle Fleet   [Dec-14-16 06:38PM  PR Newswire]
▶ Hedge Funds Are Selling Sempra Energy (SRE)   [Dec-08-16 08:46AM  at Insider Monkey]
Stock chart of SRE Financial statements of SRE
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.