Sempra (SRE) Traders Question Premium Share Price Amid New LNG Deal

Sempra (SRE) stock has delivered a 45.6% total return over the past five years, yet its recent pullback and fresh liquefied natural gas commitments leave investors wondering if the current share price still aligns with earnings.

The issue at hand is whether Sempra's recent share price, after that longer-term gain and new LNG agreement, is adequately explained by its earnings profile. To put this into perspective, a comparison of Sempra with a broader set of 38 power grid technology and infrastructure stocks shows the company trades at about 23.5x earnings, compared to an Integrated Utilities industry average of roughly 17.9x and a peer group around 19.3x.

This points to investors paying a clear premium for each dollar of current profit. However, the modelled fair P/E multiple, which folds in Sempra's growth profile, profitability, size, and risk, sits close to the current ratio, suggesting that recent enthusiasm has not pushed the earnings multiple to extreme territory.