Sempra (SRE)

The sleeper story isn't the EPS beat, it's that Texas politics just became a binding constraint on the growth story: Governor Abbott's audit letter forced ERCOT to pull its Batch Zero notification schedule days before this call, and Encore's own CEO admitted on 765kV timing, 'I don't have really a very good understanding or belief about what's going to happen'. The obvious headline, +30% YoY adjusted EPS growth, is real but partly a one-time $50 million Oncor rate catch-up, and guidance was merely reaffirmed, not raised. The binding constraint now is not demand (ERCOT hit a new 91GW peak) or capital availability ($10B incremental bucket firmed up), it's regulatory/political sequencing in Austin, where the headline large-load pipeline number already shrank 65% from 127.5GW to 44GW once real eligibility rules were applied. My view changes if the August 20th PUC meeting resolves the good-cause exception cleanly and ERCOT reinstates its original Batch Zero timeline without further slippage, or alternatively, if Encore's Q4 capital plan update shows the $10 billion incremental bucket converting into firm, CCN-approved dollars rather than another round of narrative upside.