TacticScaleWhat Sempra Does & How It Makes Money (SRE)
Updated October 2026 · reflects Sempra's latest reported financials
Regulated electric and gas utility holding company in California and Texas. Most of its earnings come from regulated utilities, where regulators set the rates customers pay so the company can recover costs and earn a return on the grid and pipeline assets it invests in.
How Sempra makes money
Most of its earnings come from regulated utilities, where regulators set the rates customers pay so the company can recover costs and earn a return on the grid and pipeline assets it invests in. The rest comes from building, operating and investing in energy infrastructure projects.
What Sempra does
Sempra is a San Diego-based energy holding company built mainly around regulated utilities. It reports three segments. Sempra California delivers electricity and natural gas in Southern California and part of central California, and runs a natural gas distribution, transmission and storage system serving 21.3 million people over 24,000 square miles. Sempra Texas Utilities runs a regulated electricity transmission and distribution business with about 18,418 circuit miles of transmission lines, 1,333 substations, links to 230 third-party power plants totaling 63,670 MW, and more than 4.1 million delivery points. The third segment, Sempra Infrastructure, develops, builds, operates and invests in energy infrastructure meant to improve access to cleaner energy in the U.S., Mexico and international markets. Because most of the business is rate-regulated, its earnings are driven mainly by investment in utility networks and by regulatory decisions. The company was incorporated in 1996 and changed its name from Sempra Energy to Sempra in 2023.
Products & services
- Electric service in Southern California
- Natural gas distribution, transmission and storage in California
- Electricity transmission and distribution in Texas
- Energy infrastructure development in the U.S. and Mexico
What is Sempra worth?
On an owner-earnings DCF, Sempra's most-likely value is about $6 versus a recent price near $81 (93% above fair value). But TacticScale only calls a stock undervalued when the price sits below its conservative no-growth floor (~$3) with a margin of safety — so the honest verdict here is “Stretched — richly priced.” Fair value earns its keep only at the extremes, not in the wide middle.
Today's $81 is above even the optimistic Bull case ($7) — the market expects faster, longer growth than modeled here. Expensive unless that extra growth actually shows up.
⚠ High leverage — net debt is 227.1× annual cash flow. Net debt is subtracted from this fair value, but refinancing at higher rates, principal timing, and share dilution aren’t modeled — the equity can be worth far less if cash flow weakens.
⚠ Capital-intensive — this business reinvests heavily, so free cash flow runs well below its earnings. Fair value here is built on free cash flow, which understates owner earnings for reinvestment-heavy companies — read it as conservative.
Analysis, not advice. Fair value is a margin-of-safety estimate from a deterministic owner-earnings DCF, not a price target or recommendation. See the full breakdown →
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