Southwest Gas (SWX)
NYSE:SWX
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Southwest Gas
(NYSE:SWX)
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Rating:66Neutral
Price Target:
$97.00
â–²(6.61% Upside)
Action:Downgraded
Date:05/09/26
The score is primarily held back by weak cash-flow quality (negative free cash flow and limited cash conversion) despite improved profitability and a gradually de-risking balance sheet. Offsetting this, the earnings call was notably positive with higher EPS guidance and a clear regulated-growth runway, while valuation appears supportive; technical signals are neutral and do not add strong momentum confirmation.
Positive Factors
Regulated rate-base growth
A multi-year rate-base CAGR backed by an explicit $6.3B capex plan creates durable earnings leverage for a regulated distributor. Rate-base growth underpins allowed returns and predictable recovery mechanisms, supporting sustainable revenue and margin expansion over the medium term.
Negative Factors
Weak cash conversion / negative FCF
Recurring negative free cash flow and operating cash flow covering only ~60% of net income indicate earnings are not fully converting to cash. This reduces internal funding for capex and dividends, increasing reliance on financing and pressuring HoldCo liquidity during heavy investment periods.
Read all positive and negative factors
Positive Factors
Negative Factors
Regulated rate-base growth
A multi-year rate-base CAGR backed by an explicit $6.3B capex plan creates durable earnings leverage for a regulated distributor. Rate-base growth underpins allowed returns and predictable recovery mechanisms, supporting sustainable revenue and margin expansion over the medium term.
Read all positive factors
Southwest Gas (SWX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.51B
Dividend Yield3.07%
Average Volume (3M)468.79K
Price to Earnings (P/E)11.4
Beta (1Y)0.30
Revenue Growth-48.15%
EPS Growth105.44%
CountryUS
Employees11,122
SectorUtilities
Sector Strength65
IndustryRegulated Gas
Share Statistics
EPS (TTM)6.42
Shares Outstanding72,374,870
10 Day Avg. Volume434,641
30 Day Avg. Volume468,788
Financial Highlights & Ratios
PEG Ratio0.11
Price to Book (P/B)1.46
Price to Sales (P/S)2.98
P/FCF Ratio-22.93
Enterprise Value/Market Cap1.46
Enterprise Value/Revenue3.81
Enterprise Value/Gross Profit10.74
Enterprise Value/Ebitda10.10
Forecast
1Y Price Target
$102.67Price Target Upside12.83% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
EPS Forecast (FY)4.26
Revenue Forecast (FY)$1.98B
Southwest Gas Business Overview & Revenue Model
Company Description
Southwest Gas Holdings, Inc., through its subsidiaries, distributes and transports natural gas in Arizona, Nevada, and California. The company operates through Natural Gas Distribution, Utility Infrastructure Services, and Pipeline and Storage seg...
How the Company Makes Money
Southwest Gas Holdings makes money primarily through (1) regulated natural gas utility operations and (2) infrastructure construction services.
1) Regulated natural gas utility revenue: The core earnings are generated by Southwest Gas Corporation...
Southwest Gas Earnings Call Summary
Earnings Call Date:Feb 25, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Aug 11, 2026
Earnings Call Sentiment Positive
The call presented a predominantly positive outlook anchored by successful strategic simplification (Centuri sale), strong 2025 utility performance (19% EPS increase from continuing operations and 8.7% adjusted net income growth), upgraded credit ratings, ample liquidity, constructive regulatory developments in Arizona and Nevada, and a material growth runway driven by the Great Basin expansion (800 MMcf/d commitments; $215M–$245M incremental margin). Risks were acknowledged but largely framed as manageable: higher O&M, increased D&A and interest costs, near-term earnings moderation during project construction, regulatory/permitting/legal timing uncertainty, and a planned use of HoldCo cash that will reduce year-end HoldCo balances. Overall, highlights substantially outweigh lowlights, supporting a positive sentiment for the company’s transition to a pure regulated utility and its forward-looking growth plan.Positive Updates
Strategic Simplification and Balance Sheet Strengthening
Completed full disposition of Centuri (Sept 2025) generating a ~$260M net gain, enabling full repayment of holding company debt, leaving nearly $600M cash on hand and >$1.3B total liquidity; S&P upgraded Southwest Gas Holdings and Southwest Gas Corp. to BBB+ (stable).
Negative Updates
Higher Operating and Non-Fuel Costs
O&M increased by $16.8M year-over-year; excluding above-target incentive compensation, O&M rose ~1.9%, driven by higher employee-related labor costs, cloud computing and outside services (partially offset by reductions in leak survey and line locating).
Read all updates
Q4-2025 Updates
Positive
Negative
Strategic Simplification and Balance Sheet Strengthening
Completed full disposition of Centuri (Sept 2025) generating a ~$260M net gain, enabling full repayment of holding company debt, leaving nearly $600M cash on hand and >$1.3B total liquidity; S&P upgraded Southwest Gas Holdings and Southwest Gas Corp. to BBB+ (stable).
Read all positive updates
Company Guidance
Management initiated 2026 adjusted EPS guidance of $4.17–$4.32 (versus a 2025 adjusted EPS base of $3.65) and targets 12%–14% adjusted EPS CAGR through 2030 (with front‑loaded 15%–17% growth through 2028–29), underpinned by a $1.25 billion 2026 capital plan ($925 million to distribution), a five‑year $6.3 billion capex program (73% Southwest Gas / 27% Great Basin), and a 5‑year rate base CAGR of 9.5%–11.5% from a ~ $6.7 billion 2025 base (utility run‑rate growth ~7% excluding Great Basin); the 2028 Great Basin expansion (subject to approvals) represents ~800 MMcf/d of committed capacity, an estimated ~$1.7 billion project cost and $215–$245 million of incremental annual margin when in service, with financing targeted at a 50/50 debt/equity mix. The plan assumes disciplined funding (~$325 million net Southwest Gas bond issuances in 2026), beginning consolidated cash of nearly $600 million and >$1.3 billion liquidity, no equity issuance expected in 2026 under the ATM, maintenance of BBB+ credit metrics with S&P‑adjusted FFO/debt ~19.7% (HoldCo) and 18.6% (utility) versus a 13% downgrade threshold (targeting >17% long‑term and >300 bps of cushion), and a 4% dividend increase to an annualized $2.58 in 2026.Southwest Gas Financial Statement Overview
Summary
Income Statement
68
Positive
Balance Sheet
62
Positive
Cash Flow
45
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.50B | 1.94B | 5.11B | 5.43B | 4.96B | 3.68B |
| Gross Profit | 887.64M | 567.96M | 1.01B | 1.02B | 994.87M | 820.93M |
| EBITDA | 943.55M | 864.68M | 976.78M | 930.54M | 439.87M | 737.09M |
| Net Income | 464.33M | 439.83M | 198.81M | 150.89M | -203.29M | 200.78M |
Balance Sheet | ||||||
| Total Assets | 10.41B | 10.43B | 12.02B | 11.87B | 13.20B | 12.77B |
| Cash, Cash Equivalents and Short-Term Investments | 484.75M | 576.64M | 363.79M | 106.54M | 123.08M | 222.70M |
| Total Debt | 3.51B | 3.51B | 5.06B | 5.28B | 5.99B | 6.32B |
| Total Liabilities | 6.30B | 6.47B | 8.33B | 8.46B | 9.98B | 9.61B |
| Stockholders Equity | 4.10B | 3.96B | 3.50B | 3.31B | 3.06B | 2.95B |
Cash Flow | ||||||
| Free Cash Flow | -748.86M | -251.79M | 409.86M | -363.31M | -451.96M | -604.24M |
| Operating Cash Flow | 437.83M | 556.08M | 1.36B | 509.21M | 407.46M | 111.38M |
| Investing Cash Flow | -39.27M | -24.81M | -921.57M | 150.97M | -838.90M | -3.04B |
| Financing Cash Flow | -243.56M | -318.28M | -176.34M | -700.79M | 356.48M | 3.06B |
Southwest Gas Technical Analysis
Positive
90.99
Price Trends
88.86
Positive
86.30
Positive
82.08
Positive
Market Momentum
-0.08
Positive
52.14
Neutral
61.05
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SWX, the sentiment is Positive. The current price of 90.99 is above the 20-day moving average (MA) of 90.08, above the 50-day MA of 88.86, and above the 200-day MA of 82.08, indicating a neutral trend. The MACD of -0.08 indicates Positive momentum. The RSI at 52.14 is Neutral, neither overbought nor oversold. The STOCH value of 61.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SWX.
Southwest Gas Risk Analysis
Southwest Gas disclosed 29 risk factors in its most recent earnings report. Southwest Gas reported the most risks in the "Finance & Corporate" 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
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $5.78B | 6.33 | 13.74% | 4.01% | 8.52% | -18.44% | |
67 Neutral | $3.04B | 12.75 | 9.49% | 2.15% | 17.14% | 15.65% | |
66 Neutral | $6.51B | 11.37 | 11.86% | 3.07% | -48.15% | 105.44% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | $5.18B | 10.53 | 8.20% | 3.45% | 2.81% | 7.01% | |
62 Neutral | $5.14B | 4.73 | 10.45% | 3.82% | 4.53% | 40.51% | |
62 Neutral | $7.64B | 3.76 | 12.77% | 3.92% | 0.52% | 20.56% |
* Utilities Sector Average
SWX
Southwest Gas
89.91
21.18
30.81%
CPK
Chesapeake Utilities
126.52
7.29
6.11%
SR
Spire
86.99
15.30
21.35%
NJR
New Jersey Resources
57.27
13.30
30.24%
UGI
UGI
35.65
1.03
2.97%
OGS
ONE Gas
82.50
10.48
14.56%
Southwest Gas Corporate Events
Executive/Board Changes
Southwest Gas Announces CEO Transition and Leadership Changes
Neutral
Feb 25, 2026
On February 19, 2026, Southwest Gas Holdings announced that President, Chief Executive Officer and Director Karen S. Haller will resign as CEO of the holding company and Southwest Gas Corporation effective May 8, 2026, and as a director following ...
Business Operations and StrategyExecutive/Board Changes
Southwest Gas Ends Icahn Cooperation Agreement, Board Remains
Neutral
Feb 12, 2026
On February 11, 2026, Southwest Gas Holdings, Inc. and the Icahn Group mutually agreed to terminate their Amended and Restated Cooperation Agreement, originally dated October 14, 2025, ending all associated rights and obligations between the parti...
Executive/Board Changes
Southwest Gas Announces Planned Retirement of Long-Serving Director
Positive
Feb 11, 2026
On February 6, 2026, Southwest Gas Holdings, Inc. announced that long-serving director Anne L. Mariucci will retire from its Board of Directors at the conclusion of the 2026 Annual Meeting of Stockholders and will not stand for re-election. The co...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.