I'll research SRE (Sempra) before writing the preview. Let me start gathering data.I'll read the most recent earnings materials (2026Q1) and the 2025Q2 for year-ago comparison.Let me get the year-ago Q2 2025 release for comparison and recent news/stock price.Let me check the management change 8-K for detail, as it's a significant recent development.I have what I need. Let me quickly compute a few performance stats.Now I have everything I need to write the preview.
Sempra heads into Q2 as a company mid-transformation: it is remaking itself into a Texas-and-California "pure-play" utility, and the quarter should carry two big tailwinds — the first full-quarter recognition of Oncor's new Texas rate case (including a catch-up surcharge) and a business model on the cusp of a major simplification via the KKR/Sempra Infrastructure Partners (SI) sale. The stock, however, is going in soft.
SRE has been a notable laggard in an otherwise steady utility tape. Shares closed at $84.68 on Aug 5, down ~5.6% YTD and ~15% off the ~$99.75 April high, versus the utility sector (XLU) up ~1% YTD. Most tellingly, the stock fell ~9% in the two weeks into the print (from ~$93 on July 22). That drawdown suggests low positioning and possibly some de-risking around the SI-sale timing and the CFO change (below) — which cuts both ways: a clean quarter with de-risked catalysts could see an outsized relief bounce, while any slippage lands on an already-nervous tape.
1) Oncor rate case flows through — Texas should be the standout. In April the PUCT approved Oncor's base rate settlement, lifting the authorized ROE to 9.75%, the equity layer to 43.5%, and setting an ~$6.97B annual revenue requirement. Crucially, management flagged that the financial benefit would be "primarily recognized in the second quarter" because the order landed in April — and Oncor is permitted to surcharge the gap between new and old rates back to Jan 1, 2026. Translation: expect a step-up in Sempra Texas earnings this quarter, part of it catch-up. For reference, Q1 2026 Texas equity earnings were $171M (up from $146M); the year-ago Q2 2025 Texas contribution was $208M. This is the single biggest swing factor for a beat.
2) The SI Partners (KKR) close — timing is now the story. The 45% equity sale is the linchpin of the "capital recycling into utilities" strategy and the balance-sheet de-leveraging thesis. As of the Q1 call, management guided to a Q2 or Q3 2026 close and had already cleared FERC, HSR, and Mexican/Korean antitrust, with remaining items around Cameron partner/JBIC consents. But a subtle tell: the July 6 executive announcement explicitly ties the CFO transition to a close "expected to occur in the third quarter of 2026." That language nudges expectations toward Q3, not Q2. Watch for a firm closing date, updated accretion commentary, and how proceeds are deployed (parent debt paydown + utility reinvestment). The smaller Ecogas sale is also expected to close Q2/Q3.
3) A CFO change — new context since Q1. On July 6, Sempra named Justin Bird (currently EVP and CEO of Sempra Infrastructure) as EVP & CFO, effective around the SI close, with current CFO Karen Sedgwick moving to run SoCalGas. It's a logical reshuffle as SI is deconsolidated, but it's a leadership change at the top financial seat during a delicate balance-sheet transition — expect analysts to probe continuity, credit strategy, and messaging.
4) The Texas growth "incremental to the incremental." This is the upside narrative investors are paying for. On the Q1 call, management pointed to Oncor's ~127 GW of qualifying large-load (mostly data center) requests submitted in the 2026 RTP filing, a ~$10B incremental CapEx bucket beyond the $65B base plan (~$9B of company-wide upside, nearly all Texas), and roughly $2.9B of South Dallas transmission projects ERCOT recently released. Jeff Martin explicitly said he'd like to update the incremental CapEx bucket "perhaps on the Q2 call." Any hard dollars added to the plan — plus color on the ERCOT Batch Zero / RTP process (Board approval targeted June 1, criteria finalized July) — is the key growth catalyst. Note management frames the $47.5B Oncor base plan as largely indifferent to how many data centers actually connect, so the base case is defended while the load is upside.
5) California regulatory cadence. Two items to track: (a) the SDG&E TO6 FERC transmission settlement (10.28% ROE, 54% equity), with a decision expected 2H26 and terms retroactive to June 1, 2025 — a potential lump recognition when approved; and (b) the SDG&E/SoCalGas General Rate Case filing, which management said would be submitted "later in Q2." Watch the ask (safety/reliability/modernization) and the affordability framing. Oncor's UTM tracker (inaugural $4.4B filing) has a hearing set for ~Aug 20, interim rates possible ~Oct 4, and a final order in 2H26 — another regulatory-lag reducer.
6) Wildfire / SB 254 in California. Management expressed "reasonable confidence" of getting wildfire-liability framework improvements done within this legislative session, buoyed by the California Earthquake Authority's April resiliency study. Given SRE's California exposure, any legislative progress (or lack thereof this session) is a sentiment mover.
7) LNG milestones (now upside, not core). ECA LNG Phase 1 was expected to produce first LNG in June with substantial completion this summer, at which point LNG revenue recognition begins; Port Arthur Phase 1 & 2 remain on time/budget, with remaining PA LNG Phase 2 offtake being marketed. Post-strategy-pivot, LNG is being de-emphasized in capital allocation (SRE targets ~60% of rate base in Texas by decade-end), so treat these as incremental positives rather than the thesis.
| Metric | Q2 2025 (PY) | Q1 2026 |
|---|---|---|
| Adjusted EPS | $0.89 | $1.51 |
| GAAP EPS | $0.71 | $1.58 |
| Sempra California earnings | $259M | $720M |
| Sempra Texas earnings | $208M | $171M |
| Sempra Infrastructure earnings | $72M | $262M |
| Parent & other | $(78)M | $(116)M |
Note: Q2 is seasonally the softest quarter for SRE (year-ago Q2 adjusted EPS was $0.89, roughly flat YoY), and quarter-to-quarter segment mix is volatile given held-for-sale accounting on SI/Ecogas, Mexico FX/inflation adjustments, and the timing of regulatory recognition. Focus on the trajectory of the full-year range and the Texas rate-case flow-through rather than a single-quarter EPS point.
The fundamental story is intact and arguably improving — a bigger, better-earning Texas utility (higher ROE, higher equity layer, reduced regulatory lag) with a large data-center-driven CapEx option, plus a cleaner balance sheet coming once SI deconsolidates. The near-term risk is execution and timing: the SI close appears to have drifted toward Q3, there's a new CFO stepping in mid-transition, and the stock is entering the print already beaten up and underperforming peers. That combination sets up a meaningful reaction in either direction — with the Oncor rate-case flow-through and any hard update on the Texas incremental capital as the two swing factors most likely to determine which way it breaks.
This preview is for informational purposes and is not investment advice.