Southwest Gas Holdings, Inc. Just Missed EPS By 44%: Here's What Analysts Think Will Happen Next

Southwest Gas Holdings, Inc. (NYSE:SWX) shareholders are probably feeling a little disappointed, since its shares fell 3.5% to US$71.23 in the week after its latest quarterly results. It looks like a pretty bad result, all things considered. Although revenues of US$1.2b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 44% to hit US$0.25 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Southwest Gas Holdings

After the latest results, the consensus from Southwest Gas Holdings' three analysts is for revenues of US$5.03b in 2024, which would reflect a discernible 5.1% decline in revenue compared to the last year of performance. Statutory earnings per share are predicted to bounce 28% to US$3.25. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.39b and earnings per share (EPS) of US$3.38 in 2024. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the US$80.00 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Southwest Gas Holdings analyst has a price target of US$89.00 per share, while the most pessimistic values it at US$76.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 9.9% annualised decline to the end of 2024. That is a notable change from historical growth of 15% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 7.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Southwest Gas Holdings is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Southwest Gas Holdings. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Southwest Gas Holdings analysts - going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Southwest Gas Holdings (1 is significant!) that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.