Intrinsic value of Sempra Energy - SRE

Previous Close

$105.99

  Intrinsic Value

$24.16

stock screener

  Rating & Target

str. sell

-77%

Previous close

$105.99

 
Intrinsic value

$24.16

 
Up/down potential

-77%

 
Rating

str. sell

*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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.15
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
Revenue, $m
  0
  10,752
  11,328
  11,931
  12,563
  13,224
  13,916
  14,642
  15,402
  16,198
  17,033
  17,909
  18,827
  19,789
  20,799
  21,858
  22,969
  24,134
  25,357
  26,640
  27,986
  29,399
  30,882
  32,438
  34,072
  35,786
  37,586
  39,475
  41,458
  43,539
  45,724
Variable operating expenses, $m
 
  8,804
  9,263
  9,744
  10,247
  10,773
  11,325
  11,903
  12,509
  13,144
  13,809
  14,270
  15,001
  15,769
  16,573
  17,417
  18,302
  19,231
  20,205
  21,227
  22,300
  23,426
  24,608
  25,848
  27,149
  28,515
  29,949
  31,455
  33,035
  34,693
  36,434
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
  8,804
  9,263
  9,744
  10,247
  10,773
  11,325
  11,903
  12,509
  13,144
  13,809
  14,270
  15,001
  15,769
  16,573
  17,417
  18,302
  19,231
  20,205
  21,227
  22,300
  23,426
  24,608
  25,848
  27,149
  28,515
  29,949
  31,455
  33,035
  34,693
  36,434
Operating income, $m
  1,564
  1,948
  2,065
  2,188
  2,316
  2,450
  2,591
  2,738
  2,893
  3,055
  3,224
  3,639
  3,825
  4,021
  4,226
  4,441
  4,667
  4,903
  5,152
  5,413
  5,686
  5,973
  6,274
  6,591
  6,922
  7,271
  7,636
  8,020
  8,423
  8,846
  9,290
EBITDA, $m
  2,876
  3,500
  3,688
  3,884
  4,090
  4,305
  4,530
  4,767
  5,014
  5,273
  5,545
  5,830
  6,129
  6,442
  6,771
  7,116
  7,477
  7,857
  8,255
  8,673
  9,111
  9,571
  10,054
  10,560
  11,092
  11,650
  12,236
  12,851
  13,497
  14,174
  14,886
Interest expense (income), $m
  532
  587
  653
  721
  793
  867
  946
  1,028
  1,114
  1,203
  1,298
  1,397
  1,500
  1,609
  1,723
  1,842
  1,968
  2,099
  2,237
  2,382
  2,534
  2,693
  2,860
  3,036
  3,220
  3,413
  3,616
  3,829
  4,053
  4,287
  4,534
Earnings before tax, $m
  1,830
  1,361
  1,412
  1,466
  1,523
  1,583
  1,645
  1,711
  1,779
  1,851
  1,927
  2,242
  2,325
  2,412
  2,503
  2,599
  2,699
  2,804
  2,915
  3,031
  3,153
  3,280
  3,414
  3,555
  3,703
  3,858
  4,020
  4,191
  4,371
  4,559
  4,756
Tax expense, $m
  389
  367
  381
  396
  411
  427
  444
  462
  480
  500
  520
  605
  628
  651
  676
  702
  729
  757
  787
  818
  851
  886
  922
  960
  1,000
  1,042
  1,086
  1,132
  1,180
  1,231
  1,284
Net income, $m
  1,371
  994
  1,031
  1,070
  1,112
  1,155
  1,201
  1,249
  1,299
  1,351
  1,406
  1,637
  1,697
  1,761
  1,827
  1,897
  1,970
  2,047
  2,128
  2,213
  2,301
  2,395
  2,492
  2,595
  2,703
  2,816
  2,935
  3,060
  3,191
  3,328
  3,472

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
  50,009
  52,689
  55,494
  58,431
  61,506
  64,726
  68,100
  71,635
  75,341
  79,224
  83,296
  87,565
  92,043
  96,738
  101,664
  106,831
  112,251
  117,939
  123,907
  130,169
  136,741
  143,637
  150,876
  158,473
  166,447
  174,818
  183,604
  192,827
  202,508
  212,672
Adjusted assets (=assets-cash), $m
  47,437
  50,009
  52,689
  55,494
  58,431
  61,506
  64,726
  68,100
  71,635
  75,341
  79,224
  83,296
  87,565
  92,043
  96,738
  101,664
  106,831
  112,251
  117,939
  123,907
  130,169
  136,741
  143,637
  150,876
  158,473
  166,447
  174,818
  183,604
  192,827
  202,508
  212,672
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
  32,632
  34,381
  36,211
  38,128
  40,134
  42,235
  44,437
  46,744
  49,162
  51,696
  54,353
  57,139
  60,060
  63,124
  66,338
  69,710
  73,247
  76,958
  80,852
  84,938
  89,227
  93,727
  98,450
  103,408
  108,611
  114,073
  119,806
  125,824
  132,142
  138,774
Working capital, $m
  -2,817
  -495
  -521
  -549
  -578
  -608
  -640
  -674
  -708
  -745
  -784
  -824
  -866
  -910
  -957
  -1,005
  -1,057
  -1,110
  -1,166
  -1,225
  -1,287
  -1,352
  -1,421
  -1,492
  -1,567
  -1,646
  -1,729
  -1,816
  -1,907
  -2,003
  -2,103
Total debt, $m
  17,121
  18,662
  20,611
  22,650
  24,785
  27,021
  29,362
  31,815
  34,385
  37,079
  39,902
  42,862
  45,966
  49,221
  52,635
  56,216
  59,972
  63,913
  68,048
  72,386
  76,939
  81,716
  86,730
  91,993
  97,516
  103,313
  109,398
  115,786
  122,491
  129,529
  136,918
Total liabilities, $m
  34,815
  36,356
  38,305
  40,344
  42,479
  44,715
  47,056
  49,509
  52,079
  54,773
  57,596
  60,556
  63,660
  66,915
  70,329
  73,910
  77,666
  81,607
  85,742
  90,080
  94,633
  99,410
  104,424
  109,687
  115,210
  121,007
  127,092
  133,480
  140,185
  147,223
  154,612
Total equity, $m
  12,971
  13,652
  14,384
  15,150
  15,952
  16,791
  17,670
  18,591
  19,556
  20,568
  21,628
  22,740
  23,905
  25,128
  26,410
  27,754
  29,165
  30,645
  32,197
  33,826
  35,536
  37,330
  39,213
  41,189
  43,263
  45,440
  47,725
  50,124
  52,642
  55,285
  58,059
Total liabilities and equity, $m
  47,786
  50,008
  52,689
  55,494
  58,431
  61,506
  64,726
  68,100
  71,635
  75,341
  79,224
  83,296
  87,565
  92,043
  96,739
  101,664
  106,831
  112,252
  117,939
  123,906
  130,169
  136,740
  143,637
  150,876
  158,473
  166,447
  174,817
  183,604
  192,827
  202,508
  212,671
Debt-to-equity ratio
  1.320
  1.370
  1.430
  1.500
  1.550
  1.610
  1.660
  1.710
  1.760
  1.800
  1.840
  1.880
  1.920
  1.960
  1.990
  2.030
  2.060
  2.090
  2.110
  2.140
  2.170
  2.190
  2.210
  2.230
  2.250
  2.270
  2.290
  2.310
  2.330
  2.340
  2.360
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
  994
  1,031
  1,070
  1,112
  1,155
  1,201
  1,249
  1,299
  1,351
  1,406
  1,637
  1,697
  1,761
  1,827
  1,897
  1,970
  2,047
  2,128
  2,213
  2,301
  2,395
  2,492
  2,595
  2,703
  2,816
  2,935
  3,060
  3,191
  3,328
  3,472
Depreciation, amort., depletion, $m
  1,312
  1,552
  1,623
  1,697
  1,774
  1,855
  1,939
  2,028
  2,121
  2,219
  2,321
  2,192
  2,304
  2,422
  2,545
  2,675
  2,811
  2,954
  3,103
  3,260
  3,425
  3,598
  3,779
  3,970
  4,170
  4,379
  4,600
  4,831
  5,074
  5,328
  5,596
Funds from operations, $m
  2,409
  2,546
  2,653
  2,767
  2,886
  3,010
  3,140
  3,277
  3,420
  3,570
  3,727
  3,828
  4,001
  4,182
  4,373
  4,572
  4,781
  5,001
  5,231
  5,473
  5,726
  5,992
  6,272
  6,565
  6,873
  7,196
  7,535
  7,891
  8,264
  8,656
  9,068
Change in working capital, $m
  90
  -25
  -27
  -28
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -72
  -75
  -79
  -83
  -87
  -91
  -96
  -101
Cash from operations, $m
  2,319
  2,571
  2,680
  2,795
  2,915
  3,041
  3,172
  3,310
  3,455
  3,607
  3,766
  3,869
  4,043
  4,227
  4,419
  4,621
  4,832
  5,054
  5,287
  5,532
  5,788
  6,057
  6,340
  6,637
  6,948
  7,275
  7,617
  7,977
  8,355
  8,752
  9,168
Maintenance CAPEX, $m
  0
  -1,248
  -1,316
  -1,386
  -1,460
  -1,537
  -1,618
  -1,703
  -1,792
  -1,885
  -1,982
  -2,085
  -2,192
  -2,304
  -2,422
  -2,545
  -2,675
  -2,811
  -2,954
  -3,103
  -3,260
  -3,425
  -3,598
  -3,779
  -3,970
  -4,170
  -4,379
  -4,600
  -4,831
  -5,074
  -5,328
New CAPEX, $m
  -4,214
  -1,671
  -1,749
  -1,830
  -1,916
  -2,006
  -2,101
  -2,202
  -2,307
  -2,418
  -2,534
  -2,657
  -2,786
  -2,921
  -3,064
  -3,214
  -3,372
  -3,537
  -3,711
  -3,894
  -4,086
  -4,288
  -4,500
  -4,723
  -4,957
  -5,203
  -5,462
  -5,733
  -6,018
  -6,318
  -6,632
Cash from investing activities, $m
  -4,886
  -2,919
  -3,065
  -3,216
  -3,376
  -3,543
  -3,719
  -3,905
  -4,099
  -4,303
  -4,516
  -4,742
  -4,978
  -5,225
  -5,486
  -5,759
  -6,047
  -6,348
  -6,665
  -6,997
  -7,346
  -7,713
  -8,098
  -8,502
  -8,927
  -9,373
  -9,841
  -10,333
  -10,849
  -11,392
  -11,960
Free cash flow, $m
  -2,567
  -348
  -385
  -422
  -461
  -503
  -547
  -594
  -644
  -696
  -751
  -873
  -934
  -999
  -1,067
  -1,139
  -1,214
  -1,294
  -1,377
  -1,466
  -1,558
  -1,656
  -1,758
  -1,866
  -1,979
  -2,099
  -2,224
  -2,355
  -2,494
  -2,639
  -2,792
Issuance/(repayment) of debt, $m
  1,586
  1,890
  1,949
  2,039
  2,135
  2,235
  2,341
  2,453
  2,570
  2,694
  2,824
  2,960
  3,104
  3,255
  3,414
  3,581
  3,756
  3,941
  4,135
  4,339
  4,553
  4,778
  5,014
  5,262
  5,523
  5,797
  6,085
  6,387
  6,705
  7,039
  7,389
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
  1,890
  1,949
  2,039
  2,135
  2,235
  2,341
  2,453
  2,570
  2,694
  2,824
  2,960
  3,104
  3,255
  3,414
  3,581
  3,756
  3,941
  4,135
  4,339
  4,553
  4,778
  5,014
  5,262
  5,523
  5,797
  6,085
  6,387
  6,705
  7,039
  7,389
Total cash flow (excl. dividends), $m
  633
  1,542
  1,564
  1,617
  1,673
  1,732
  1,794
  1,859
  1,927
  1,998
  2,073
  2,087
  2,170
  2,256
  2,347
  2,442
  2,542
  2,647
  2,757
  2,873
  2,994
  3,122
  3,256
  3,396
  3,544
  3,699
  3,861
  4,032
  4,211
  4,400
  4,597
Retained Cash Flow (-), $m
  -1,142
  -681
  -732
  -766
  -802
  -839
  -879
  -921
  -965
  -1,011
  -1,060
  -1,112
  -1,166
  -1,222
  -1,282
  -1,345
  -1,411
  -1,480
  -1,553
  -1,629
  -1,710
  -1,794
  -1,883
  -1,976
  -2,074
  -2,177
  -2,285
  -2,399
  -2,518
  -2,643
  -2,775
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
 
  861
  832
  851
  872
  893
  915
  938
  961
  986
  1,012
  976
  1,004
  1,034
  1,065
  1,098
  1,132
  1,167
  1,205
  1,244
  1,285
  1,328
  1,373
  1,420
  1,470
  1,522
  1,576
  1,633
  1,693
  1,756
  1,822
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
 
  789
  693
  639
  584
  528
  473
  419
  367
  317
  270
  213
  177
  145
  116
  91
  71
  54
  40
  29
  20
  14
  10
  6
  4
  2
  1
  1
  0
  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 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 19.3
Price to Sales 2.6
Price to Book 2
Price to Tangible Book
Price to Cash Flow 11.4
Price to Free Cash Flow -14
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 5.4% 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 251.496 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 $26.7 billion.

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COMPANY NEWS

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▶ Sempra meets 3Q profit forecasts   [07:11AM  Associated Press]
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▶ [$$] Texas Regulators Are Wary of Sempra's Deal to Buy Oncor   [Oct-26-17 04:47PM  The Wall Street Journal]
▶ Why Dividend Stocks Are Killing Growth Stocks in 2017   [Oct-19-17 08:00AM  Investopedia]
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▶ [$$] Energy Future, Elliott Challenge Vistra on Taxes   [Oct-13-17 10:12AM  The Wall Street Journal]
▶ How Analysts View PG&Es Recent Stock Changes   [07:38AM  Market Realist]
Financial statements of SRE
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