Sempra (NYSE: SRE), despite a recent 5.3% fall in its stock value, displays signs of long-term resilience, as indicated by its financial metrics. The company's return on equity (ROE), a profitability measure reflecting the profit made per $1 of shareholders' capital, stands at 9.3% for the year ending June 2023. This figure aligns closely with the industry average of 9.1%.
The ROE, which translates to a $0.09 profit per $1 of shareholders' capital, is calculated based on a net profit of US$2.9 billion and shareholders' equity of US$31 billion. High ROE and profit retention rates are typically associated with higher growth rates.
While Sempra's ROE may seem modest, other factors point toward potential earnings growth. Over the last five years, the company has experienced a significant net income growth of 21%. Additionally, it maintains a low payout ratio, indicating that a large portion of its earnings is being reinvested back into the business. Efficient management strategies further bolster Sempra's growth trajectory.
These indicators suggest that despite the recent dip in stock value, Sempra holds potential for long-term resilience and growth, underpinned by its robust financial performance and efficient business strategies.
InvestingPro Insights
InvestingPro real-time data and tips further highlight the strength of Sempra (NYSE: SRE). The company has a market cap of 43.8 billion USD and a P/E ratio of 17.54, which is relatively low compared to its near-term earnings growth. This suggests that the company is undervalued and has potential for future growth. The company's PEG ratio as of Q2 2023 stands at 0.14, indicating that the stock is reasonably priced considering its earnings growth rate.
Two key InvestingPro tips further emphasize the company's potential. Firstly, Sempra has raised its dividend for 12 consecutive years, demonstrating a commitment to returning profits to shareholders. Secondly, analysts anticipate sales growth in the current year, which could lead to increased profitability and further enhance shareholder value.
For more detailed insights and tips, consider subscribing to InvestingPro's premium service, which offers additional tips and real-time data. Currently, InvestingPro lists 9 additional tips related to Sempra. To access these tips, visit InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.