Intrinsic value of Sempra Energy - SRE

Previous Close

$114.24

  Intrinsic Value

$74.41

stock screener

  Rating & Target

sell

-35%

Previous close

$114.24

 
Intrinsic value

$74.41

 
Up/down potential

-35%

 
Rating

sell

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 2017), $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 28.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.10
  9.59
  9.13
  8.72
  8.35
  8.01
  7.71
  7.44
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
Revenue, $m
  12,339
  13,522
  14,757
  16,043
  17,382
  18,775
  20,223
  21,727
  23,290
  24,915
  26,604
  28,360
  30,186
  32,087
  34,066
  36,127
  38,274
  40,514
  42,850
  45,287
  47,832
  50,491
  53,269
  56,173
  59,210
  62,388
  65,713
  69,193
  72,838
  76,654
Variable operating expenses, $m
  4,362
  4,752
  5,159
  5,582
  6,023
  6,482
  6,958
  7,454
  7,969
  8,504
  8,760
  9,339
  9,940
  10,566
  11,218
  11,896
  12,604
  13,341
  14,110
  14,913
  15,751
  16,626
  17,541
  18,497
  19,498
  20,544
  21,639
  22,785
  23,985
  25,242
Fixed operating expenses, $m
  5,173
  5,287
  5,403
  5,522
  5,644
  5,768
  5,895
  6,025
  6,157
  6,293
  6,431
  6,573
  6,717
  6,865
  7,016
  7,170
  7,328
  7,489
  7,654
  7,822
  7,994
  8,170
  8,350
  8,534
  8,722
  8,913
  9,110
  9,310
  9,515
  9,724
Total operating expenses, $m
  9,535
  10,039
  10,562
  11,104
  11,667
  12,250
  12,853
  13,479
  14,126
  14,797
  15,191
  15,912
  16,657
  17,431
  18,234
  19,066
  19,932
  20,830
  21,764
  22,735
  23,745
  24,796
  25,891
  27,031
  28,220
  29,457
  30,749
  32,095
  33,500
  34,966
Operating income, $m
  2,803
  3,483
  4,195
  4,939
  5,715
  6,525
  7,369
  8,249
  9,165
  10,119
  11,412
  12,449
  13,529
  14,656
  15,832
  17,060
  18,343
  19,684
  21,085
  22,552
  24,087
  25,694
  27,378
  29,142
  30,991
  32,930
  34,964
  37,098
  39,338
  41,689
EBITDA, $m
  7,250
  8,327
  9,454
  10,630
  11,857
  13,135
  14,465
  15,850
  17,292
  18,792
  20,354
  21,980
  23,675
  25,441
  27,282
  29,202
  31,207
  33,300
  35,487
  37,773
  40,163
  42,664
  45,282
  48,022
  50,892
  53,899
  57,050
  60,354
  63,819
  67,452
Interest expense (income), $m
  532
  1,048
  1,256
  1,472
  1,696
  1,931
  2,175
  2,429
  2,692
  2,966
  3,251
  3,547
  3,855
  4,175
  4,508
  4,854
  5,214
  5,590
  5,981
  6,389
  6,815
  7,259
  7,722
  8,207
  8,713
  9,242
  9,795
  10,374
  10,980
  11,614
  12,278
Earnings before tax, $m
  1,755
  2,227
  2,723
  3,242
  3,784
  4,350
  4,941
  5,556
  6,198
  6,868
  7,865
  8,594
  9,354
  10,149
  10,978
  11,846
  12,753
  13,702
  14,696
  15,737
  16,828
  17,972
  19,171
  20,429
  21,749
  23,135
  24,590
  26,118
  27,724
  29,410
Tax expense, $m
  474
  601
  735
  875
  1,022
  1,175
  1,334
  1,500
  1,674
  1,854
  2,124
  2,320
  2,526
  2,740
  2,964
  3,198
  3,443
  3,700
  3,968
  4,249
  4,544
  4,852
  5,176
  5,516
  5,872
  6,246
  6,639
  7,052
  7,485
  7,941
Net income, $m
  1,281
  1,626
  1,988
  2,367
  2,763
  3,176
  3,607
  4,056
  4,525
  5,013
  5,742
  6,273
  6,829
  7,408
  8,014
  8,647
  9,310
  10,003
  10,728
  11,488
  12,285
  13,119
  13,995
  14,913
  15,877
  16,889
  17,951
  19,066
  20,238
  21,470

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  55,581
  60,911
  66,473
  72,268
  78,299
  84,572
  91,093
  97,870
  104,912
  112,230
  119,837
  127,747
  135,975
  144,536
  153,449
  162,733
  172,407
  182,494
  193,016
  203,996
  215,461
  227,437
  239,951
  253,033
  266,714
  281,026
  296,003
  311,681
  328,097
  345,290
Adjusted assets (=assets-cash), $m
  55,581
  60,911
  66,473
  72,268
  78,299
  84,572
  91,093
  97,870
  104,912
  112,230
  119,837
  127,747
  135,975
  144,536
  153,449
  162,733
  172,407
  182,494
  193,016
  203,996
  215,461
  227,437
  239,951
  253,033
  266,714
  281,026
  296,003
  311,681
  328,097
  345,290
Revenue / Adjusted assets
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
  0.222
Average production assets, $m
  41,471
  45,448
  49,598
  53,922
  58,422
  63,103
  67,968
  73,025
  78,279
  83,740
  89,416
  95,318
  101,456
  107,844
  114,495
  121,422
  128,640
  136,167
  144,017
  152,210
  160,765
  169,700
  179,037
  188,798
  199,006
  209,685
  220,861
  232,559
  244,807
  257,636
Working capital, $m
  -1,764
  -1,934
  -2,110
  -2,294
  -2,486
  -2,685
  -2,892
  -3,107
  -3,331
  -3,563
  -3,804
  -4,055
  -4,317
  -4,588
  -4,871
  -5,166
  -5,473
  -5,793
  -6,127
  -6,476
  -6,840
  -7,220
  -7,617
  -8,033
  -8,467
  -8,921
  -9,397
  -9,895
  -10,416
  -10,962
Total debt, $m
  23,258
  27,250
  31,416
  35,756
  40,274
  44,973
  49,857
  54,932
  60,207
  65,688
  71,386
  77,311
  83,473
  89,886
  96,561
  103,515
  110,761
  118,316
  126,197
  134,421
  143,008
  151,978
  161,351
  171,150
  181,397
  192,116
  203,334
  215,077
  227,373
  240,250
Total liabilities, $m
  41,630
  45,622
  49,788
  54,128
  58,646
  63,345
  68,229
  73,304
  78,579
  84,060
  89,758
  95,683
  101,845
  108,258
  114,933
  121,887
  129,133
  136,688
  144,569
  152,793
  161,380
  170,350
  179,723
  189,522
  199,769
  210,488
  221,706
  233,449
  245,745
  258,622
Total equity, $m
  13,951
  15,289
  16,685
  18,139
  19,653
  21,228
  22,864
  24,565
  26,333
  28,170
  30,079
  32,065
  34,130
  36,279
  38,516
  40,846
  43,274
  45,806
  48,447
  51,203
  54,081
  57,087
  60,228
  63,511
  66,945
  70,538
  74,297
  78,232
  82,352
  86,668
Total liabilities and equity, $m
  55,581
  60,911
  66,473
  72,267
  78,299
  84,573
  91,093
  97,869
  104,912
  112,230
  119,837
  127,748
  135,975
  144,537
  153,449
  162,733
  172,407
  182,494
  193,016
  203,996
  215,461
  227,437
  239,951
  253,033
  266,714
  281,026
  296,003
  311,681
  328,097
  345,290
Debt-to-equity ratio
  1.670
  1.780
  1.880
  1.970
  2.050
  2.120
  2.180
  2.240
  2.290
  2.330
  2.370
  2.410
  2.450
  2.480
  2.510
  2.530
  2.560
  2.580
  2.600
  2.630
  2.640
  2.660
  2.680
  2.690
  2.710
  2.720
  2.740
  2.750
  2.760
  2.770
Adjusted equity ratio
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,281
  1,626
  1,988
  2,367
  2,763
  3,176
  3,607
  4,056
  4,525
  5,013
  5,742
  6,273
  6,829
  7,408
  8,014
  8,647
  9,310
  10,003
  10,728
  11,488
  12,285
  13,119
  13,995
  14,913
  15,877
  16,889
  17,951
  19,066
  20,238
  21,470
Depreciation, amort., depletion, $m
  4,446
  4,844
  5,259
  5,691
  6,142
  6,610
  7,096
  7,602
  8,127
  8,673
  8,942
  9,532
  10,146
  10,784
  11,449
  12,142
  12,864
  13,617
  14,402
  15,221
  16,076
  16,970
  17,904
  18,880
  19,901
  20,969
  22,086
  23,256
  24,481
  25,764
Funds from operations, $m
  5,727
  6,470
  7,247
  8,058
  8,904
  9,785
  10,703
  11,658
  12,652
  13,687
  14,683
  15,805
  16,974
  18,193
  19,464
  20,790
  22,174
  23,619
  25,130
  26,709
  28,361
  30,089
  31,899
  33,793
  35,778
  37,857
  40,037
  42,322
  44,719
  47,233
Change in working capital, $m
  -162
  -169
  -177
  -184
  -191
  -199
  -207
  -215
  -224
  -232
  -241
  -251
  -261
  -272
  -283
  -295
  -307
  -320
  -334
  -349
  -364
  -380
  -397
  -415
  -434
  -454
  -475
  -498
  -521
  -546
Cash from operations, $m
  5,889
  6,639
  7,424
  8,242
  9,096
  9,985
  10,910
  11,873
  12,875
  13,919
  14,925
  16,056
  17,235
  18,465
  19,747
  21,084
  22,481
  23,940
  25,464
  27,058
  28,725
  30,470
  32,296
  34,208
  36,212
  38,311
  40,512
  42,820
  45,240
  47,779
Maintenance CAPEX, $m
  -3,767
  -4,147
  -4,545
  -4,960
  -5,392
  -5,842
  -6,310
  -6,797
  -7,302
  -7,828
  -8,374
  -8,942
  -9,532
  -10,146
  -10,784
  -11,449
  -12,142
  -12,864
  -13,617
  -14,402
  -15,221
  -16,076
  -16,970
  -17,904
  -18,880
  -19,901
  -20,969
  -22,086
  -23,256
  -24,481
New CAPEX, $m
  -3,802
  -3,977
  -4,150
  -4,324
  -4,500
  -4,681
  -4,865
  -5,056
  -5,254
  -5,461
  -5,676
  -5,902
  -6,139
  -6,388
  -6,650
  -6,927
  -7,219
  -7,526
  -7,851
  -8,193
  -8,554
  -8,935
  -9,337
  -9,761
  -10,208
  -10,679
  -11,175
  -11,698
  -12,249
  -12,828
Cash from investing activities, $m
  -7,569
  -8,124
  -8,695
  -9,284
  -9,892
  -10,523
  -11,175
  -11,853
  -12,556
  -13,289
  -14,050
  -14,844
  -15,671
  -16,534
  -17,434
  -18,376
  -19,361
  -20,390
  -21,468
  -22,595
  -23,775
  -25,011
  -26,307
  -27,665
  -29,088
  -30,580
  -32,144
  -33,784
  -35,505
  -37,309
Free cash flow, $m
  -1,679
  -1,485
  -1,271
  -1,041
  -797
  -538
  -266
  20
  319
  630
  875
  1,213
  1,565
  1,931
  2,312
  2,708
  3,120
  3,549
  3,997
  4,463
  4,950
  5,458
  5,989
  6,543
  7,124
  7,732
  8,369
  9,036
  9,736
  10,470
Issuance/(repayment) of debt, $m
  3,846
  3,992
  4,166
  4,340
  4,518
  4,698
  4,884
  5,076
  5,275
  5,482
  5,698
  5,924
  6,162
  6,413
  6,676
  6,954
  7,246
  7,555
  7,881
  8,224
  8,587
  8,970
  9,373
  9,799
  10,247
  10,720
  11,218
  11,743
  12,296
  12,878
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  3,846
  3,992
  4,166
  4,340
  4,518
  4,698
  4,884
  5,076
  5,275
  5,482
  5,698
  5,924
  6,162
  6,413
  6,676
  6,954
  7,246
  7,555
  7,881
  8,224
  8,587
  8,970
  9,373
  9,799
  10,247
  10,720
  11,218
  11,743
  12,296
  12,878
Total cash flow (excl. dividends), $m
  2,167
  2,507
  2,895
  3,299
  3,721
  4,160
  4,618
  5,096
  5,593
  6,112
  6,572
  7,137
  7,727
  8,343
  8,988
  9,661
  10,366
  11,104
  11,878
  12,688
  13,537
  14,427
  15,362
  16,342
  17,371
  18,452
  19,587
  20,779
  22,031
  23,347
Retained Cash Flow (-), $m
  -1,281
  -1,338
  -1,396
  -1,455
  -1,514
  -1,575
  -1,637
  -1,701
  -1,768
  -1,837
  -1,909
  -1,985
  -2,065
  -2,149
  -2,237
  -2,330
  -2,428
  -2,532
  -2,641
  -2,756
  -2,878
  -3,006
  -3,141
  -3,284
  -3,434
  -3,592
  -3,759
  -3,935
  -4,120
  -4,315
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
  886
  1,169
  1,499
  1,845
  2,207
  2,586
  2,981
  3,395
  3,826
  4,275
  4,663
  5,152
  5,662
  6,195
  6,750
  7,331
  7,938
  8,573
  9,237
  9,931
  10,659
  11,421
  12,221
  13,058
  13,937
  14,859
  15,827
  16,844
  17,911
  19,032
Discount rate, %
  8.60
  9.03
  9.48
  9.96
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.42
  27.74
  29.12
  30.58
  32.11
  33.71
  35.40
PV of cash for distribution, $m
  816
  984
  1,142
  1,262
  1,342
  1,384
  1,389
  1,361
  1,304
  1,222
  1,102
  993
  875
  756
  638
  527
  426
  336
  259
  195
  142
  101
  70
  47
  31
  19
  12
  7
  4
  2
Current shareholders' claim on cash, %
  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 is a holding company. The Company's principal operating units are Sempra Utilities, which includes its San Diego Gas & Electric Company (SDG&E), Southern California Gas Company (SoCalGas) and Sempra South American Utilities segments, and Sempra Infrastructure, which includes its Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream segments. As of December 31, 2016, SDG&E's service area covered 4,100 square miles. Sempra South American Utilities operates Chilquinta Energia, which serves customers in the region of Valparaiso in central Chile. As of December 31, 2016, SoCalGas had natural gas franchises with the 12 counties and the 223 cities in its service territory. Sempra LNG & Midstream owns land in Simpson County, Mississippi Hub. Sempra LNG & Midstream owns land in Port Arthur, Texas. Sempra Renewables has operations, investments or development projects in the various United States markets.

FINANCIAL RATIOS  of  Sempra Energy (SRE)

Valuation Ratios
P/E Ratio 20.8
Price to Sales 2.8
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 12.3
Price to Free Cash Flow -15.1
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 $11207 million for the last fiscal year's total revenue generated by Sempra Energy. The default revenue input number comes from 2017 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 10.1% 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 8.6%, 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 35.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $5062 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 5.4% 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 336.1%.

Life of production assets of 10 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 -14.3%. 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 - $12670 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 252 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 $28.8 billion.

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COMPANY NEWS

▶ SoCalGas Declares Preferred Dividends   [11:57AM  PR Newswire]
▶ Sempra Energy Forms North American Infrastructure Group   [Aug-08-18 10:37PM  PR Newswire]
▶ SoCal Gas reaches $119.5M settlement over Aliso Canyon gas leak   [04:35PM  American City Business Journals]
▶ Correction: PepsiCo-CEO-Women-Glance story   [Aug-07-18 06:57PM  Associated Press]
▶ Sempra Energy to Host Earnings Call   [10:00AM  ACCESSWIRE]
▶ Sempra: 2Q Earnings Snapshot   [07:13AM  Associated Press]
▶ [$$] Sempra Energy Leads 11 Utilities in Management Top 250   [01:52PM  The Wall Street Journal]
▶ Oncor To Release Second Quarter 2018 Results On August 6   [Jul-30-18 05:10PM  PR Newswire]
▶ Sempra Energy's Q2 Earnings Preview   [Jul-25-18 10:52AM  Benzinga]
▶ Dallas firm turns to NAACP with new fund to track inclusive companies   [Jul-23-18 12:34PM  American City Business Journals]
▶ [$$] Sempra to Sell Wind and Solar Assets   [10:24AM  The Wall Street Journal]
▶ Sempra Energy Declares Common And Preferred Dividends   [Jun-20-18 11:51AM  PR Newswire]
▶ Company News For Jun 12, 2018   [09:56AM  Zacks]
▶ PRESS DIGEST- Financial Times - June 12   [Jun-11-18 08:03PM  Reuters]
▶ [$$] Elliott Management Pushes for Changes at Sempra Energy   [07:58PM  The Wall Street Journal]
▶ [$$] Elliott Management Pushes for Changes at Sempra Energy   [05:16PM  The Wall Street Journal]
▶ What Happened in the Stock Market Today   [04:53PM  Motley Fool]
▶ Elliott Gives Sempra a Surprise Encore   [02:09PM  Bloomberg]
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