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Southwest Gas Corp. (SWX)
NYSE:SWX
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Southwest Gas
(NYSE:SWX)
65Neutral
Positive Factors
Net Income Growth
SWX delivered net income growth of ~8% through the execution of their regulatory strategy, effective cost management, and strong customer growth.
Regulatory Improvements
The company has seen continued improvement in its previously challenged blended regulatory construct, especially as AZ has improved significantly for all utilities in the state.
Negative Factors
Separation Challenges
Low visibility to conclusion of a prolonged separation of its weakening utility infrastructure services business continues to place a meaningful overhang on the stock.
Southwest Gas (SWX) vs. S&P 500 (SPY)
Market Cap
$5.23B
Dividend Yield3.41%
Average Volume (3M)373.56K
Price to Earnings (P/E)26.3
Beta (1Y)0.78
Revenue Growth-5.92%
EPS Growth29.47%
CountryUS
Employees2,371
SectorUtilities
Sector Strength84
IndustryRegulated Utilities
Share Statistics
EPS (TTM)2.76
Shares Outstanding71,822,330
10 Day Avg. Volume415,566
30 Day Avg. Volume373,557
Financial Highlights & Ratios
PEG Ratio0.89
Price to Book (P/B)N/A
Price to Sales (P/S)1.19
Price to Cash Flow (P/CF)6.50
P/FCF Ratio6.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$75.50Price Target Upside5.05% Upside
Rating ConsensusHold
Number of Analyst Covering4
Southwest Gas Business Overview & Revenue Model
Company DescriptionSouthwest Gas Holdings, Inc. (SWX) is a utility company primarily engaged in the distribution of natural gas. Headquartered in Las Vegas, Nevada, Southwest Gas operates in the regulated energy sector, providing natural gas services to residential, commercial, and industrial customers across Arizona, Nevada, and California. The company is dedicated to delivering safe, reliable, and affordable natural gas while focusing on customer satisfaction and sustainable practices.
How the Company Makes MoneySouthwest Gas generates revenue primarily through the distribution and sale of natural gas to its customer base, which includes residential, commercial, and industrial users. The company's revenue model is based on regulated utility rates that are approved by state regulatory commissions. These rates allow the company to recover its costs of providing service, including infrastructure maintenance, operations, and a reasonable return on investment. Key revenue streams include fixed monthly customer charges, volumetric charges based on natural gas consumption, and additional fees for services such as connection and disconnection. Southwest Gas also benefits from infrastructure expansion projects, which increase its customer base and, consequently, its revenue potential. The company's earnings are significantly influenced by regulatory decisions, natural gas market prices, and the overall demand for natural gas in its service areas.
Southwest Gas Financial Statement Overview
Summary
Southwest Gas exhibits strong cash flow and improved operational margins, despite historical net income volatility and high leverage. The recent debt management and cash flow improvements are positive, but sustained profitability and further deleveraging are necessary.Income Statement
The company demonstrated a strong revenue growth trend from 2020 to 2023, with a dip in 2024. The gross profit margin was consistent, but net profit margin was volatile due to fluctuating net income, notably impacted by a significant loss in 2022. EBIT and EBITDA margins showed resilience, especially in 2024, indicating operational efficiency improvements.72
Positive
Balance Sheet
The balance sheet reflects a high level of debt, especially in 2023, which decreased in 2024, improving the debt-to-equity ratio. The return on equity was inconsistent due to fluctuating net income, but the equity ratio improved in 2024, indicating a stronger equity base. Overall, leverage remains a concern, but there are signs of improvement.65
Positive
Cash Flow
Cash flow from operations improved significantly in 2024, with robust free cash flow generation. The operating cash flow to net income ratio was strong, indicating effective cash management. Free cash flow to net income also improved, reflecting better cash efficiency. The company has shown strong cash flow resilience and growth.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.11B | 5.43B | 4.96B | 3.68B | 3.30B | Gross Profit |
| 5.11B | 1.02B | 994.87M | 820.93M | 818.49M | EBIT |
| 483.77M | 418.33M | 1.15B | 1.09B | 423.00M | EBITDA |
| 976.78M | 930.54M | 439.87M | 726.57M | 735.01M | Net Income Common Stockholders |
| 198.81M | 150.89M | -1.62B | 200.78M | 232.32M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 363.79M | 106.54M | 123.08M | 222.70M | 83.35M | Total Assets |
| 12.02B | 11.87B | 13.20B | 12.77B | 8.74B | Total Debt |
| 30.02M | 5.44B | 5.99B | 6.32B | 2.88B | Net Debt |
| -333.77M | 5.33B | 5.87B | 6.10B | 2.80B | Total Liabilities |
| 8.33B | 8.46B | 9.98B | 9.61B | 5.90B | Stockholders Equity |
| 3.50B | 3.31B | 3.06B | 2.95B | 2.67B |
| Cash Flow | Free Cash Flow | |||
| 1.25B | -363.31M | -451.96M | -604.24M | -199.03M | Operating Cash Flow |
| 1.25B | 509.21M | 407.46M | 111.38M | 626.08M | Investing Cash Flow |
| -831.09M | 150.97M | -838.90M | -3.04B | -802.07M | Financing Cash Flow |
| -181.97M | -700.79M | 356.48M | 3.06B | 209.57M |
Southwest Gas Technical Analysis
Negative
71.87
Price Trends
73.33
Negative
73.61
Negative
72.53
Negative
Market Momentum
-0.46
Positive
37.35
Neutral
11.23
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SWX, the sentiment is Negative. The current price of 71.87 is below the 20-day moving average (MA) of 75.50, below the 50-day MA of 73.33, and below the 200-day MA of 72.53, indicating a bearish trend. The MACD of -0.46 indicates Positive momentum. The RSI at 37.35 is Neutral, neither overbought nor oversold. The STOCH value of 11.23 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SWX.
Southwest Gas Risk Analysis
Southwest Gas disclosed 34 risk factors in its most recent earnings report. Southwest Gas reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Southwest Gas Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $23.80B | 21.25 | 9.00% | 2.25% | 5.90% | 11.85% | |
76 Outperform | $6.98B | 12.98 | 12.22% | 4.62% | -14.01% | ― | |
75 Outperform | $4.40B | 19.14 | 7.59% | 3.54% | -12.16% | -5.73% | |
66 Neutral | $4.77B | 14.39 | 15.15% | 3.66% | 9.18% | 36.67% | |
65 Neutral | $5.23B | 26.32 | 5.84% | 3.41% | -5.92% | 29.47% | |
65 Neutral | $11.91B | 15.60 | 6.55% | 4.41% | 7.00% | 0.55% | |
64 Neutral | $1.67B | 20.51 | 5.91% | 4.70% | -3.71% | -21.36% |
* Utilities Sector Average
Performance Comparison
SWX
Southwest Gas
71.87
0.85
1.20%
ATO
Atmos Energy
148.66
35.01
30.81%
NJR
New Jersey Resources
48.48
7.31
17.76%
NWN
Northwest Gas
41.48
5.57
15.51%
UGI
UGI
32.38
8.35
34.75%
OGS
ONE Gas
73.53
12.81
21.10%
Southwest Gas Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -7.00% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong financial and operational performance for Southwest Gas Holdings, with record margin performance and positive regulatory outcomes. However, challenges in Century's business and higher interest expenses present areas of concern. The company is poised for future growth, supported by strong customer additions and strategic regulatory efforts.Highlights
Record Annual Operating Margin Performance
Southwest Gas Holdings finished the year with record annual operating margin performance and the second straight year of a return on equity over 8%.
Strong Customer Growth
The company added about 41,000 new meter sets in the last twelve months, driven by strong economic activity and significant in-migration.
Positive Regulatory Outcomes
The company received approval for a nearly $59 million revenue increase in Nevada, representing 98% of their request, and is progressing with a $50 million case in California.
Strong Financial Position
Southwest Gas Holdings ended 2024 with more than $360 million in cash, suggesting strong liquidity and financial flexibility.
Lowlights
Reduced Performance in Century's Business
Century's results were lower in 2024 due to a reduction in the volume of work under MSAs in natural gas business lines and the absence of prior year's higher offshore wind work.
Higher Interest Expense
The company faced increased interest expenses due to regulatory balance changes and higher variable interest rates.
Nonlinear Growth Challenges
The company anticipates nonlinear net income growth due to regulatory structures, although formula rates in Arizona might improve this in the future.
Company Guidance
In the earnings call for Southwest Gas Holdings, several key metrics and guidance for the year 2025 and beyond were discussed. The company anticipates utility net income to range between $265 million and $275 million for the full year 2025, driven by improvements in margin and regulatory strategies alongside cost management efforts. The company plans a significant capital expenditure of approximately $880 million in 2025, contributing to a projected compound annual growth rate (CAGR) in rate base between 6% and 8% from 2025 to 2029. This investment is primarily aimed at enhancing safety, reliability, and economic development. Additionally, the company has outlined a five-year capital spending plan of $4.3 billion. Despite these expenditures, Southwest Gas Holdings remains committed to maintaining an investment-grade balance sheet and paying competitive dividends, while also focusing on the strategic separation of Century from its operations.Southwest Gas Corporate Events
Executive/Board Changes
Southwest Gas Announces CEO Performance Stock Award
Neutral
Feb 25, 2025
On February 20, 2025, Southwest Gas Holdings, Inc. announced that its Board of Directors approved a special performance stock unit award for Karen S. Haller, the company’s President and CEO. The award, under the 2024 Omnibus Incentive Plan, includes 25,456.088 performance stock units that will vest based on specific performance goals by December 31, 2026, with provisions for immediate vesting under certain conditions, reflecting the company’s commitment to aligning executive compensation with performance metrics.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.