Episode Details

Sempra (SRE) Q2 2026 — Q2 2026 (quarter ended June 30, 2026): GAAP earnings $796M / $1.21 diluted EPS vs $461M / $0.71. Adjusted earnings $762M / $1.16 adjusted diluted EPS vs $583M / $0.89, against a Street bar of $1.07 - a $0.09 beat. Revenue $2,997M vs $3,000M, essentially flat, and 6.9% below the ~$3.22B consensus. Equity earnings $547M vs $393M. 2026 GAAP EPS guidance raised to $5.02-$5.55; 2026 adjusted EPS guidance only AFFIRMED at $4.80-$5.30; 2027 affirmed $5.10-$5.70; long-term growth 7-9%. Shares closed the print day (Aug 6) at $84.35, down 0.37%, and $84.56 on Aug 7. Sempra beat the adjusted earnings bar by nine cents - $1.16 against $1.07 - and grew adjusted earnings 30% on revenue that was dead flat and missed consensus by about 7%. The stock closed DOWN 0.37% on 5.7M shares against a 3.6M average. Here is why, and it is one sentence in Sempra's own 10-Q that nobody quoted: 'In the second quarter of 2026, Oncor recognized the impact of the surcharge, including amounts related to the first quarter of 2026. As a result, our second-quarter equity earnings include a favorable impact of approximately $50 million, net of income tax, attributable to the first quarter.' Fifty million dollars across 655.9M diluted shares is $0.076 a share - eight cents of the nine-cent beat. Strip the out-of-period catch-up and Q2 adjusted EPS was about $1.08 against a $1.07 bar. An in-line quarter. We also tested the obvious cynical explanation - that the bar had been cut - by pulling the February and May 8-Ks off EDGAR. The 2026 adjusted range has been $4.80-$5.30 all year, unchanged, and the $1.07 quarterly bar demanded 20% year-over-year growth. That thesis is FALSE, and the falsification is the more useful finding. Our call is HOLD, 3/5, fair value ~$88 against the $84.56 close. Wall Street says Buy with an average target near $106 - and not one of the 26 analysts has a target at or below the price. THE CALL: HOLD (3/5, A GOOD BUSINESS AT A FAIR PRICE, ON A QUARTER THAT DID NOT MAKE IT CHEAPER) — base-case value ~$88.0 vs ~$84.56 today. KEY METRICS: - CALL: HOLD 3/5, fair value ~$88 vs the $84.56 Aug 7 close (+4.1%). Bull $106, base $88, bear $66. Street: Buy, 26 analysts, avg target $106, median $103.50, LOW $101. - Adjusted EPS $1.16 vs a $1.07 bar (+8.4%), adjusted earnings $762M vs $583M. GAAP EPS $1.21 vs $0.71. Revenue $2,997M, flat and 6.9% under the ~$3.22B bar. - But the 10-Q says ~$50M of Q2 equity earnings ($0.08/sh) was attributable to Q1. Adjusted guidance only AFFIRMED at $4.80-$5.30; H1 is $2.67, so H2 implies -0.4%. What to watch: UP: signed interconnection agreements out of Oncor's ~44 GW Batch Zero large-load queue; the 2026-2030 capital plan raised above $65B; the KKR close for 45% of Sempra Infrastructure landing above expectations; Q3 landing at the top of the $4.80-$5.30 band. DOWN: a California wildfire event that outruns the AB 1054 fund; an adverse 2028 California GRC; common equity issued to plug the funding gap; a Q3 that confirms the first half was borrowed. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.