Is Sempra’s Clean Energy Focus Justifying Its Share Price Gains in 2025?

Wondering if Sempra is a hidden value opportunity in the utilities sector? You are not alone. Many investors have their eyes on the numbers behind this stock. Sempra's share price has shown resilience recently, gaining 1.9% in the past week and 0.4% over the last month. Year-to-date it is up 7.6% and has gained 6.0% in the past year. Recent news headlines have focused on Sempra's continued investments in clean energy infrastructure and new regulatory developments, both of which could influence future growth. These factors, along with growing discussion of the utility's ambitions in renewables, have stirred up interest and speculation around recent price movements. If you look at our quick valuation checks, Sempra scores a 0 out of 6 for being undervalued, suggesting it is not obviously cheap right now. Let us dive into how we assess that value using different approaches, and read on to see an even better way to cut through the noise at the end of the article.

Sempra scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Sempra Dividend Discount Model (DDM) Analysis

The Dividend Discount Model (DDM) estimates a stock’s value by projecting future dividend payments and then discounting them back to the present to determine fair value. This model is best used for companies like Sempra that have consistent dividend histories and growth in payouts.

Sempra currently pays an annual dividend per share of $2.95, with a payout ratio of 54.5%. Its return on equity stands at 9.7%, and its projected long-term dividend growth is capped at 3.3%. Analysts expect dividend increases to remain moderate, which reflects a cautious outlook on future cash flow stability. The DDM’s methodology here centers on the sustainability and steady growth of Sempra’s dividend stream rather than unpredictable earnings jumps or capital gains.

The resulting estimated intrinsic value per share under the DDM is $79.69. With Sempra’s actual share price sitting well above that estimate, the stock is calculated to be 17.6% overvalued based on current dividend projections. While the company’s dividend outlook remains solid, the price investors are currently paying does not suggest a bargain relative to its projected income stream.

Result: OVERVALUED

Our Dividend Discount Model (DDM) analysis suggests Sempra may be overvalued by 17.6%. Discover 870 undervalued stocks or create your own screener to find better value opportunities.SRE Discounted Cash Flow as at Nov 2025

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Sempra.

Story Continues

Approach 2: Sempra Price vs Earnings

The Price-to-Earnings (PE) ratio is commonly used to assess companies that report steady profits, like Sempra. This measure gives investors a quick sense of how expensive a stock is relative to the earnings it produces. Since Sempra is consistently profitable, the PE ratio is a suitable metric to judge its current value in the market.

It is important to remember that the "right" PE ratio is not one-size-fits-all. Expectations for future earnings growth, the level of business risk, and overall industry dynamics play a big role in what investors see as a reasonable or fair PE. Higher growth prospects or lower risk can justify higher PE ratios, while more risk or slower growth typically suggest lower ones.

Sempra is currently trading at a PE ratio of 29x. This is above both the industry average of 18.3x and the average of close peers at 24.8x. While these benchmarks offer context, Simply Wall St computes an even more tailored "Fair Ratio" for Sempra at 28.3x. The Fair Ratio considers not only industry norms, but also factors like Sempra’s growth outlook, risk profile, profit margins, and size, making it a more nuanced tool than a raw peer or industry comparison.

With Sempra’s actual PE and the Fair Ratio less than 1x apart, the stock appears priced about where it should be based on its financial profile and prospects.

Result: ABOUT RIGHTNYSE:SRE PE Ratio as at Nov 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1396 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Sempra Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is a clear story you create about a company’s future, combining your expectations for growth, profit margins, and fair value. This connects what you know about the business with the numbers behind its forecasted results.

Narratives not only tie a company’s real-world story to a financial forecast, but they also make it much easier to see what you believe about Sempra’s prospects, how that’s reflected in the numbers, and whether the stock appears attractive at today’s price. Simply Wall St makes Narratives accessible to all investors right on the Community page, where millions already share, compare, and refine their investment views.

With Narratives, you can quickly check whether Sempra’s Fair Value is above or below the current share price, providing instant context for buying or selling decisions. As news breaks or fresh earnings data becomes available, your Narrative’s forecasts and values update in real time, keeping your analysis relevant without any manual number crunching.

For example, some investors building a Sempra Narrative may forecast strong margin improvement and arrive at a fair value close to $96.53, while others with a more cautious outlook might set their fair value near $79.69. This shows just how personal and dynamic a Narrative can be.

Do you think there's more to the story for Sempra? Head over to our Community to see what others are saying!NYSE:SRE Community Fair Values as at Nov 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include SRE.

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