Sempra (SREA) Balance Sheet

The dramatic decline in net PPE in 2026Q2, from $50.5B in 2026Q1 to $24.2B, appears inconsistent with the steady growth observed earlier, possibly indicating a major asset sale or a change in consolidation scope. This volatility complicates the assessment of rate base growth, as the underlying regulated asset expansion may be masked by corporate actions. Investors should monitor subsequent filings to clarify whether this reflects a strategic shift or a data anomaly.

The sharp contraction in net PPE in 2026Q2, if not a data error, may indicate that a significant portion of the rate base has been moved to assets held for sale or deconsolidated, which would alter the regulatory recovery timeline. The earlier growth trajectory, with PPE rising from $57.0B in 2024Q1 to $66.0B in 2025Q2, aligns with a robust CAPEX program, but the recent decline warrants scrutiny. If the decline reflects a divestiture, the associated regulatory assets and liabilities would need to be re-evaluated for recovery risk.

The debt-to-equity ratio has remained relatively stable around 0.85-1.01, but the 2026Q2 equity jump to $40.0B, from $32.2B in 2026Q1, appears anomalous given the concurrent drop in total assets to $32.9B. This suggests a possible data misalignment or a major equity issuance that could be masking underlying leverage. Excluding the outlier, the trend shows debt growing faster than equity, which may indicate increasing reliance on debt financing for CAPEX, potentially straining regulatory capital structure limits.

The steady accumulation of equity, even as ROE fluctuated between 0.2% and 2.7%, suggests that Sempra is retaining earnings to fund growth, which is typical for utilities in a heavy CAPEX phase. The 2026Q2 equity figure of $40.0B appears inconsistent with the asset base, but if real, it could indicate a significant equity infusion, possibly through an ATM program, which would dilute existing shareholders. Dividend payout safety appears adequate given the equity growth, but the low ROE in recent quarters (0.2% in 2025Q3) raises questions about the sustainability of returns.

The collapse in the current ratio to 0.03 in 2026Q2, from 1.69 in the prior quarter, is alarming and suggests a significant misstatement or a major short-term debt maturity. Even in earlier quarters, the current ratio was below 1.0 (e.g., 0.48 in 2025Q2), indicating persistent liquidity pressure. This may force Sempra to rely on revolving credit facilities or commercial paper, but the data does not disclose available capacity. The negative cash position in some quarters (e.g., $7M in 2025Q3) underscores the tightness, and investors should monitor access to capital markets.

The heavy CAPEX spending, particularly the $7.0B in 2025Q4, has not yet translated into revenue growth, as revenue remained around $3.0B in 2026Q2. This indicates that regulatory recovery mechanisms, such as trackers or rate case approvals, may be lagging behind investment. The negative operating income in 2026Q2 further suggests that costs are not being recovered in a timely manner. Sempra's ability to recover these investments will depend on future rate case outcomes and the implementation of forward-looking rate mechanisms, which are not yet evident in the financials.