SRE 77.05 (+0.03%)
US8168511090Utilities - RegulatedUtilities - Diversified

Last update on 2024-06-06

Sempra Energy (SRE) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Get an in-depth Piotroski F-Score analysis on Sempra Energy (SRE) for 2023. Discover SRE's profitability, liquidity, and operating efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 7

We're running Sempra Energy (SRE) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

The Piotroski F-Score helps evaluate a company's financial health. Sempra Energy (SRE) scored 7 out of 9 points in this rating system. They showed strong profitability with increasing net income, positive cash flow, and improved return on assets. Their operating cash flow also exceeded net income, highlighting quality earnings. However, their leverage slightly increased, and their current ratio decreased, indicating some concerns about financial risk and liquidity. Despite additional outstanding shares, improvements in gross margin and asset turnover contributed positively. Overall, this analysis portrays Sempra Energy as a financially robust company.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 7, Sempra Energy (SRE) shows strong financial health with significant improvements in key areas like profitability and operational efficiency. While there are concerns regarding leverage and current ratio, the company’s positive trends in gross margin and asset turnover suggest it could be a strong investment. However, investors should keep an eye on debt levels and liquidity to ensure these do not become long-term issues. It might be worth considering for investment, keeping in mind its strong performance and areas needing improvement.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Sempra Energy (SRE)

Company has a positive net income?

Net income is a key indicator of a company's profitability, showing the essential bottom line of total profit after all expenses are deducted from revenues.

Historical Net Income of Sempra Energy (SRE)

Sempra Energy (SRE) has posted a net income of $3,075,000,000 in 2023, which is positive. This metric, being central to profitability analysis, strengthens the company’s financial health as it indicates endogenous profit-making capability. Historically, when comparing 2023 net income to years prior, it embodies the company's highest reported net income over a 20-year span, surpassing its last peak in 2020 of $3,933,000,000. Hence, this not only contributes a full point to Piotroski's F-Score but also posits a robust upward trajectory in net income, reflecting an efficacious fiscal management.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash generated by a company from its normal business operations. It is crucial to examine because it indicates the financial health and operational efficiency of the company.

Historical Operating Cash Flow of Sempra Energy (SRE)

For Sempra Energy (SRE) in 2023, the CFO is $6,218,000,000, which is significantly positive. This not only adds 1 point in the Piotroski F-Score but signals robust financial health and operational efficiency. Historically, SRE's CFO has fluctuated. Notably, the 2023 CFO is remarkably higher compared to previous years, such as $384,200,000 in 2021 and $1,142,000,000 in 2022. This notable increase suggests an upward trend in operational performance, greatly benefiting stakeholders, as the company can reinvest into its operations or pay down debt more effectively when cash flow is on the rise.

Return on Assets (ROA) are growing?

Change in Return on Assets (ROA) for Sempra Energy (SRE) measures the company's ability to generate profit from its assets. An increasing ROA indicates improved efficiency in asset utilization.

Historical change in Return on Assets (ROA) of Sempra Energy (SRE)

Sempra Energy (SRE) experienced a rise in its ROA from 0.0284 in 2022 to 0.0371 in 2023, signaling enhanced profitability and asset efficiency. This translates to a positive trend wherein the company posted a 30.64% improvement in its ROA. Considering Sempra Energy's performance compared to the 20-year industry median ROA, which has fluctuated around mid-30s% and sharply declined to 0.2683 in 2022, this rise for SRE, though modest in comparison to industry medians historically, reflects positively on the management's strategies and effective asset utilization amid industry downtrends. Therefore, we add 1 point to the Piotroski score, reinforcing the sustained improvement.

Operating Cashflow are higher than Netincome?

Compare the Operating Cash Flow with the Net Income for the given year and determine if OCF is higher. It provides insight into the quality of earnings.

Historical accruals of Sempra Energy (SRE)

For Sempra Energy (SRE) in 2023, the Operating Cash Flow (OCF) is $6,218,000,000, whereas the Net Income is $3,075,000,000. As the OCF is higher than the Net Income, the company earns a point in this Piotroski criterion. This is a positive trend, indicating strong cash generation capability relative to reported earnings. Historically, SRE's OCF has largely been lower than its Net Income but the significant increase in OCF in 2023 demonstrates robust operational efficiency.

Liquidity of Sempra Energy (SRE)

Leverage is declining?

Change in leverage assesses the company's shift in financial risk by comparing its debt levels over two periods.

Historical leverage of Sempra Energy (SRE)

The leverage of Sempra Energy (SRE) has increased from 0.3124 in 2022 to 0.3184 in 2023, indicating a rise in financial risk. Therefore, under Piotroski's analysis, this criterion scores 0 points. Historically, Sempra's leverage trends fluctuate but have seen notable highs, such as 0.3564 in 2018, and lows, such as 0.0036 in 2013. While the current change is minor, it suggests a trend towards higher debt levels, contrasting with periods of lower leverage.

Current Ratio is growing?

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations with its current assets. It is important to consider as it reflects the financial health and operational efficiency of the company.

Historical Current Ratio of Sempra Energy (SRE)

Comparing the Current Ratio of 0.5421 in 2023 with 0.5972 in 2022, it is clear that the ratio has decreased. A lower current ratio indicates a reduction in the company's ability to cover its short-term liabilities, which is not favorable. Over the last 20 years, Sempra Energy's current ratio had highs such as 1.1611 in 2006 but has mostly been below 1.0, consistently underperforming the industry median, which ranged between 1.0739 and 0.8309 during the same period. This trend signifies that Sempra Energy often struggles more than its peers in meeting its short-term obligations. Hence, the point for this criterion is set to 0.

Number of shares not diluted?

Change in Shares Outstanding refers to the difference in the number of shares that are currently held by investors measured over a period.

Historical outstanding shares of Sempra Energy (SRE)

The Outstanding Shares for Sempra Energy (SRE) have increased from 630,318,000 in 2022 to 630,296,000 in 2023, indicating a growth in outstanding shares. This trend results in 0 points.

Operating of Sempra Energy (SRE)

Cross Margin is growing?

In the Piotroski F-Score, an increase in Gross Margin year-over-year earns a point. Gross Margin reflects the core profitability of a company's operations before other costs are taken into account.

Historical gross margin of Sempra Energy (SRE)

Sempra Energy (SRE) exhibited a Gross Margin of 0.3959 in 2023, up from 0.3609 in 2022, indicating an improvement in its core profitability. This increase is significant within the Piotroski framework because it underscores an upward trend in operational efficiency, capturing an essential aspect of the company's ability to turn revenue into gross profit. Over the past 20 years, Sempra's Gross Margin fluctuated, with notable highs like 0.7044 in 2006, and industry medians also depicted variations. Compared to the industry median of 0.3416 in 2023, Sempra Energy's Gross Margin not only improved but also outperformed its peers that year, signaling a robust operational performance. Given this increase, Sempra Energy earns 1 point for this criterion in the Piotroski Analysis.

Asset Turnover Ratio is growing?

Asset Turnover compares sales to assets, indicating revenue generation efficiency per dollar of asset.

Historical asset turnover ratio of Sempra Energy (SRE)

The Asset Turnover Ratio for Sempra Energy (SRE) has increased from 0.1917 in 2022 to 0.2017 in 2023. This rise implies that the company has been more efficient in generating revenue from its assets over the past year. Historically, SRE's Asset Turnover has experienced fluctuation, peaking at 0.4441 in 2005 and experiencing a downtick during years like 2019 with 0.1715. The upward movement to 0.2017, though slight, marks an improved use of its assets. Thus, this criterion receives a score of 1, which positively impacts its overall Piotroski Score.


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