SWX Stock Overview
Southwest Gas Holdings, Inc., through its subsidiaries, distributes and transports natural gas in Arizona, Nevada, and California.
Southwest Gas Holdings Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$69.75|
|52 Week High||US$95.62|
|52 Week Low||US$62.58|
|1 Month Change||-13.17%|
|3 Month Change||-20.74%|
|1 Year Change||2.97%|
|3 Year Change||-23.44%|
|5 Year Change||-10.20%|
|Change since IPO||298.57%|
Recent News & Updates
Southwest Gas Grapples With Strategic Review And I See Limited Upside
Summary Southwest Gas Holdings, Inc. is a diversified gas utility with regulated and unregulated arms. There is a reasonable dividend and a long history of dividend raises. Southwest Gas management grapples with a strategic review and options to sell parts of the business while also taking on projects relating to a green future. There is some upside available, but given the relatively conservative dividend yield and the strategic review uncertainties, better options than Southwest Gas may exist. In this article, we examine Southwest Gas Holdings, Inc. (SWX) and examine whether this is a buy. The business is diversified and there is some upside at normalized P/E levels, and it is making movements towards green and renewables. But there are also risks and challenges that we discuss. The company is based in Nevada and has infrastructure and operations that span both regulated and unregulated businesses, providing growth opportunities that solely regulated utilities rarely have. Their regulated operations arm include the main Southwest Gas Corporation, with over two million residential, industrial, and commercial customers in parts of California, Nevada, and Arizona. The recent MountainWest acquisitions (late 2021) added miles of interstate gas transmission over Utah, Colorado, and Wyoming. The Unregulated arm of the business is the Centuri Group that focuses on proving regulated utilities support in building and maintaining networks over North America with their expertise in infrastructure services. The mix provides crucial growth opportunities, with the utilities infrastructure services of Centuri providing strong growth opportunities, relative to the relatively flat distribution revenues (Figure 1). Figure 1. SWX's growth in separate segments (TIKR Terminal) Next, we will look at some challenges facing Southwest Gas, with challenges from the diversified nature of the business, options for spinning off parts of the business, movements towards green power, and a final look at valuation and investment opportunities. Recent challenges facing Southwest Gas Holdings Let us dive into some challenges facing the company. They have been facing some profitability issues. Margins appear to be declining (Figure 2) - not falling off a cliff, but certainly, something for an investor to be mindful of and monitor in coming quarters/years. SWX Operating Margin ((TTM)) data by YCharts Figure 2. Declining margins at SWX Their operational performance seems to suffer at the same time, with other measures of profitability also under pressure (Figure 3). Again, this is something for an investor to be mindful of and monitor. In particular, I find the ROIC measure to be low, to begin with (see a comparison with peers, below) and so further declines are concerning. SWX Return on Equity data by YCharts Figure 3. Declining profitability at SWX There are some concerns about the level of debt. The recent MountainWest acquisition required issuing additional equity and had a $2 billion cost and increased leverage. News of the acquisition of Questar Pipeline (then, now renamed MountainWest) led Carl Icahn to call for SWX to drop the acquisition. Icahn has a shareholder. And, of course, he is also keen on spinning off the infrastructure services (including construction) unit and improving the SWX balance sheet. In October 2021, Fitch placed SWX on Rating Watch Negative following the news of the Questar Pipeline acquisition. In April 2022, Fitch downgraded SWX from BBB+ to BBB. In 2022, there has been a strategic review, as outlined in the recent earnings call. In essence, which parts of the business should be retained and which spun off? This creates some uncertainty - which we return to later. Why an income investor would like Southwest Gas Holdings There is a lot to like here for income investors. Seeking Alpha notes SWX has a forward dividend yield of 3.01% and a five-year DGR of 11.74%. There is a very long history of dividend payments and increases in this case (Figure 4). Figure 4. SWX's dividend increases and history (Seeking Alpha) Opportunities for Southwest Gas to explore green options Southwest Gas operates in a diverse geographic area and this has provided the chance to explore opportunities with hydrogen. They noted on 13 September that they were beginning the Truckee Hydrogen Project: Over an 18-month period, the Project will test a blend of 5% to 20% hydrogen with natural gas, flowing through plastic and steel pipelines. The hydrogen used in this test is created through the process called electrolysis which separates hydrogen from oxygen in water - a low- to no-carbon generating process that releases oxygen beneficially into our atmosphere and stores hydrogen for use, further reducing GHG emissions. This Project aims to provide critical data that will help the creation of the nation's first hydrogen-injection standard for natural gas operators. In the short-term, I do not expect these types of projects to make much difference, but the projects will be crucial in the long term. There have been recent moves by some gas utilities to become 'more green' and embrace a lower carbon impact. They have achieved this by including hydrogen in the mix. For example, in early 2022, Chesapeake Utilities (CPK) experimented with a hydrogen and gas mix to reduce emissions in power generation. Doing this effectively will be non-trivial from an engineering perspective and much work will be required. In contrast, SWX has some exposure to renewables through their infrastructure Centuri business, with $125 million of wind power projects lined up. However, these are still limited steps in the right direction with a multi-year (decade!) timeframe for success. Can Southwest Gas go green - yes, but if this is important to you, would a pure renewable play be a better choice? (See, for instance, my coverage of Atlantica Sustainable (AY)). In this analysis, we can see that Southwest is a gas utility and a dividend payer that will never be as green as a pure renewable utility. Peer comparison For the comparison with peers, I've used a range of gas utilities: Chesapeake Utilities New Fortress Energy (NFE) NiSource (NI) New Jersey Resources (NJR) Northwest Natural Holding (NWN) ONE Gas (OGS) RGC Resources (RGCO) Spire (SR); I have previously covered Spire. UGI (UGI) In terms of valuation, Southwest Gas appears to be on the higher end of the valuation. Table 1 includes the top two metrics in each column bolded. We can see that SWX has one of the lowest EV/Sales levels, below the average of 3.8x. The EV/EBITDA is on the high side, coming in fourth at 14.7x, and a reasonable way above the average. The Price / Sales appears more favorable, where SWX again is one of the lower valuations, at 1.2x compared to the average of 1.7x. Table 1. Southwest Gas compared to peers over multiple valuation metrics Ticker EV / Sales (LTM) EV / EBITDA Price / Sales (LTM) CPK 4.8 13.7 3.6 NFE 7.6 41.1 5.6 NI 4.3 11.8 2.3 NJR 2.7 15.3 1.6 NWN 3.2 11.4 1.6 OGS 3.7 15.8 1.9 RGCO 3.9 -22.5 2.2 SR 3.6 12.5 1.6 SWX 2.6 14.7 1.2 UGI 1.5 5.3 0.9 Summary 3.8 11.9 1.7 Source: Author, with data from Stock Rover How does SWX stack up against peers in terms of other metrics? The answer is not particularly favorable most times. In Table 2, I present a comparison of some of the key metrics I focus on. The divine yield is attractive, yes, but is about average for this peer group. SWX has a good track record of dividend payments, while some of its peers do not. The final two columns give me pause for concern; I like the Piotroski F-Score as a fast method of assessing the viability of an investment. Here, SWX is quite lower than its peers with the lowest score of 3, below most of them that sit at 6 or 7. The ROIC is, similarly, lower than peers (as the second lowest value) with UGI having a much higher ROIC value. Table 2. Southwest Gas compared with peers Ticker Div. Yield Consecutive Div. Growth Years Piotroski F Score ROIC CPK 1.7% 10+ 6 7.0% NFE 0.7% 1 7 6.0% NI 3.3% 5 6 5.8% NJR 3.3% 10+ 6 6.2% NWN 4.0% 10+ 5 5.0% OGS 3.1% 7 6 4.1% RGCO 3.7% 10+ 4 -6.7% SR 4.0% 10+ 6 4.7% SWX 3.1% 10+ 3 3.3% UGI 3.8% 10+ 6 13.2% Summary 3.1% 10+ 6 4.9% Outlook for Southwest Gas as an investment The outlook broadly looks positive for Southwest. Analysts expect revenue to rise in 2022, and then increase at a slower pace in 2023-2026 (Figure 5). Figure 5. SWX's rising revenue and EBITDA (TIKR Terminal) Analysts' expect dividends and EPS rises to continue in coming years (Figure 6). So, as an investment to generate income, SWX looks attractive. Figure 6. Historic EPS and dividends and analysts' estimates presented beyond the vertical line (TIKR Terminal) Valuation for Southwest Gas and investment opportunity To assess the valuation and opportunities for an investment in Southwest, I will turn to FAST Graphs as it allows me to use analysts estimates of earnings and expectations of a P/E multiple to assess likely returns if prices reach that multiple and that EPS level. This enables an assessment of likely outcomes, using consensus estimates and historically achieved P/E ratios to assess what would happen if prices move in line with the expectations. The FAST Graphs analyst scorecard suggests an 85% hit (mostly!) or beat over both one-year estimates (at the 10% margin of error) and two-years (at the 20% margin of error). The analyst successes on the scorecard suggest that we can rely on the estimates in the following calculations. If prices continue to be at the normalized P/E of 20.16x (historical P/E over the last five years), then there is an upside and the FAST Graphs calculator suggests a total rate of return of 32%, an annualized RoR of 12.9% (Figure 7). Figure 7. Analysts' estimates for EPS and P/E multiples allowing calculation of possible returns (FAST Graphs) FAST Graphs enables us to evaluate different outcomes quickly and I often run more conservative scenarios. If the multiples contract and a P/E of only 15x is achieved at the end of 2024 (Figure 8), this implies a total RoR of 0.15%, or a negligible annualized RoR! This outcome is, in my opinion, conservative and it implies more upside than downside in this situation. Figure 8. Analysts' expectations and outcome if P/E is only 15x (FAST Graphs) If the review process results in a spin-off of parts of Southwest, this would change the outlook. A summary of my thoughts on Southwest Gas Considering some of my recent analyses, I thought a brief summary section might be useful when my thoughts were for a Hold or tentatively edging into a Buy. Business - diversification could offer stability - but does a utility benefit from this? A lower Piotroski F-Score than peers. Valuation - no margin of safety but not over-priced. Some upside here is based on expected revenue growths if normalized P/E is maintained.
|SWX||US Gas Utilities||US Market|
Return vs Industry: SWX exceeded the US Gas Utilities industry which returned -2.1% over the past year.
Return vs Market: SWX exceeded the US Market which returned -23.2% over the past year.
|SWX Average Weekly Movement||4.9%|
|Gas Utilities Industry Average Movement||3.3%|
|Market Average Movement||6.8%|
|10% most volatile stocks in US Market||15.5%|
|10% least volatile stocks in US Market||2.8%|
Stable Share Price: SWX is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.
Volatility Over Time: SWX's weekly volatility (5%) has been stable over the past year.
About the Company
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 segments. It also provides trenching, installation, and replacement of underground pipes, as well as maintenance services for energy distribution systems.
Southwest Gas Holdings Fundamentals Summary
|SWX fundamental statistics|
Is SWX overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|SWX income statement (TTM)|
|Cost of Revenue||US$3.49b|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||2.21|
|Net Profit Margin||3.37%|
How did SWX perform over the long term?See historical performance and comparison
3.6%Current Dividend Yield
Does SWX pay a reliable dividends?See SWX dividend history and benchmarks
|Southwest Gas Holdings dividend dates|
|Ex Dividend Date||Nov 14 2022|
|Dividend Pay Date||Dec 01 2022|
|Days until Ex dividend||42 days|
|Days until Dividend pay date||59 days|
Does SWX pay a reliable dividends?See SWX dividend history and benchmarks
Is SWX undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 3/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for SWX?
Other financial metrics that can be useful for relative valuation.
|What is SWX's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does SWX's PE Ratio compare to its peers?
|SWX PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
SJI South Jersey Industries
BIPC Brookfield Infrastructure
OGS ONE Gas
NFG National Fuel Gas
SWX Southwest Gas Holdings
Price-To-Earnings vs Peers: SWX is expensive based on its Price-To-Earnings Ratio (31.6x) compared to the peer average (21x).
Price to Earnings Ratio vs Industry
How does SWX's PE Ratio compare vs other companies in the Global Gas Utilities Industry?
Price-To-Earnings vs Industry: SWX is expensive based on its Price-To-Earnings Ratio (31.6x) compared to the Global Gas Utilities industry average (13.7x)
Price to Earnings Ratio vs Fair Ratio
What is SWX's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PE Ratio||31.6x|
|Fair PE Ratio||24.7x|
Price-To-Earnings vs Fair Ratio: SWX is expensive based on its Price-To-Earnings Ratio (31.6x) compared to the estimated Fair Price-To-Earnings Ratio (24.7x).
Share Price vs Fair Value
What is the Fair Price of SWX when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: SWX ($69.75) is trading below our estimate of fair value ($112.71)
Significantly Below Fair Value: SWX is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.
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How is Southwest Gas Holdings forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?
Future Growth Score2/6
Future Growth Score 2/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: SWX's forecast earnings growth (15.1% per year) is above the savings rate (1.9%).
Earnings vs Market: SWX's earnings (15.1% per year) are forecast to grow faster than the US market (14.8% per year).
High Growth Earnings: SWX's earnings are forecast to grow, but not significantly.
Revenue vs Market: SWX's revenue (4.4% per year) is forecast to grow slower than the US market (7.7% per year).
High Growth Revenue: SWX's revenue (4.4% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: SWX's Return on Equity is forecast to be low in 3 years time (8.6%).
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How has Southwest Gas Holdings performed over the past 5 years?
Past Performance Score2/6
Past Performance Score 2/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: SWX has high quality earnings.
Growing Profit Margin: SWX's current net profit margins (3.4%) are lower than last year (7.7%).
Past Earnings Growth Analysis
Earnings Trend: SWX's earnings have grown by 3.4% per year over the past 5 years.
Accelerating Growth: SWX's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.
Earnings vs Industry: SWX had negative earnings growth (-44%) over the past year, making it difficult to compare to the Gas Utilities industry average (10.2%).
Return on Equity
High ROE: SWX's Return on Equity (4.3%) is considered low.
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How is Southwest Gas Holdings's financial position?
Financial Health Score0/6
Financial Health Score 0/6
Short Term Liabilities
Long Term Liabilities
Financial Position Analysis
Short Term Liabilities: SWX's short term assets ($1.6B) do not cover its short term liabilities ($2.4B).
Long Term Liabilities: SWX's short term assets ($1.6B) do not cover its long term liabilities ($7.0B).
Debt to Equity History and Analysis
Debt Level: SWX's net debt to equity ratio (164.1%) is considered high.
Reducing Debt: SWX's debt to equity ratio has increased from 99% to 170.1% over the past 5 years.
Debt Coverage: SWX's debt is not well covered by operating cash flow (6.1%).
Interest Coverage: SWX's interest payments on its debt are not well covered by EBIT (2.3x coverage).
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What is Southwest Gas Holdings's current dividend yield, its reliability and sustainability?
Dividend Score 3/6
Cash Flow Coverage
Current Dividend Yield
Upcoming Dividend Payment
Dividend Yield vs Market
|Southwest Gas Holdings Dividend Yield vs Market|
|Company (Southwest Gas Holdings)||3.6%|
|Market Bottom 25% (US)||1.7%|
|Market Top 25% (US)||4.7%|
|Industry Average (Gas Utilities)||3.5%|
|Analyst forecast in 3 Years (Southwest Gas Holdings)||3.9%|
Notable Dividend: SWX's dividend (3.56%) is higher than the bottom 25% of dividend payers in the US market (1.67%).
High Dividend: SWX's dividend (3.56%) is low compared to the top 25% of dividend payers in the US market (4.73%).
Stability and Growth of Payments
Stable Dividend: SWX's dividends per share have been stable in the past 10 years.
Growing Dividend: SWX's dividend payments have increased over the past 10 years.
Earnings Payout to Shareholders
Earnings Coverage: With its high payout ratio (100.8%), SWX's dividend payments are not well covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: SWX is paying a dividend but the company has no free cash flows.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Karen Haller (58 yo)
Ms. Karen S. Haller has been Chief Legal & Administrative Officer of Southwest Gas Holdings, Inc. since May 2018 and serves as its Director since May 12, 2022 and served as Executive Vice President since M...
CEO Compensation Analysis
|Karen Haller's Compensation vs Southwest Gas Holdings Earnings|
|Date||Total Comp.||Salary||Company Earnings|
|Jun 30 2022||n/a||n/a|
|Mar 31 2022||n/a||n/a|
|Dec 31 2021||US$2m||US$494k|
|Sep 30 2021||n/a||n/a|
|Jun 30 2021||n/a||n/a|
|Mar 31 2021||n/a||n/a|
|Dec 31 2020||US$3m||US$465k|
|Sep 30 2020||n/a||n/a|
|Jun 30 2020||n/a||n/a|
|Mar 31 2020||n/a||n/a|
|Dec 31 2019||US$2m||US$437k|
|Sep 30 2019||n/a||n/a|
|Jun 30 2019||n/a||n/a|
|Mar 31 2019||n/a||n/a|
|Dec 31 2018||US$1m||US$403k|
|Sep 30 2018||n/a||n/a|
|Jun 30 2018||n/a||n/a|
|Mar 31 2018||n/a||n/a|
|Dec 31 2017||US$2m||US$366k|
|Sep 30 2017||n/a||n/a|
|Jun 30 2017||n/a||n/a|
|Mar 31 2017||n/a||n/a|
|Dec 31 2016||US$1m||US$343k|
|Sep 30 2016||n/a||n/a|
|Jun 30 2016||n/a||n/a|
|Mar 31 2016||n/a||n/a|
|Dec 31 2015||US$967k||US$319k|
Compensation vs Market: Karen's total compensation ($USD2.07M) is below average for companies of similar size in the US market ($USD6.89M).
Compensation vs Earnings: Karen's compensation has been consistent with company performance over the past year.
Experienced Management: SWX's management team is considered experienced (4.5 years average tenure).
Experienced Board: SWX's board of directors are considered experienced (3.8 years average tenure).
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
|02 Sep 22||BuyUS$53,273,248||Icahn Capital LP||Company||672,666||US$79.89|
|15 Aug 22||BuyUS$54,566,479||Icahn Capital LP||Company||710,988||US$78.12|
|13 Jun 22||SellUS$121,194||Jose Cardenas||Individual||1,360.06||US$89.11|
|02 Jun 22||SellUS$852,110||Eric DeBonis||Individual||9,200||US$93.19|
|31 May 22||SellUS$62,602||Lori Colvin||Individual||675||US$92.78|
|27 May 22||SellUS$359,799||Lori Colvin||Individual||3,846.23||US$93.64|
|Owner Type||Number of Shares||Ownership Percentage|
Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 13.4%.
|Ownership||Name||Shares||Current Value||Change %||Portfolio %|
Southwest Gas Holdings, Inc.'s employee growth, exchange listings and data sources
- Name: Southwest Gas Holdings, Inc.
- Ticker: SWX
- Exchange: NYSE
- Founded: 1931
- Industry: Gas Utilities
- Sector: Utilities
- Implied Market Cap: US$4.674b
- Shares outstanding: 67.01m
- Website: https://www.swgasholdings.com
Number of Employees
- Southwest Gas Holdings, Inc.
- 8360 South Durango Drive
- Post Office Box 98510
- Las Vegas
- United States
|Ticker||Exchange||Primary Security||Security Type||Country||Currency||Listed on|
|SWX||NYSE (New York Stock Exchange)||Yes||Common Stock||US||USD||Jul 1979|
|SZR||DB (Deutsche Boerse AG)||Yes||Common Stock||DE||EUR||Jul 1979|
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/10/02 00:00|
|End of Day Share Price||2022/09/30 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.