Southwest Gas Holdings, Inc. (NYSE:SWX): Immense Growth Potential?

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In March 2019, Southwest Gas Holdings, Inc. (NYSE:SWX) announced its earnings update. Overall, analyst forecasts seem in-line with its track record, as upcoming earnings growth is expected to be 8.8% next year, similar to the range of average earnings growth for the past five years of 9.5% per year. Currently with trailing-twelve-month earnings of US$182m, we can expect this to reach US$198m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Southwest Gas Holdings in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Southwest Gas Holdings

How is Southwest Gas Holdings going to perform in the near future?

The longer term view from the 3 analysts covering SWX is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:SWX Past and Future Earnings, June 7th 2019
NYSE:SWX Past and Future Earnings, June 7th 2019

By 2022, SWX’s earnings should reach US$236m, from current levels of US$182m, resulting in an annual growth rate of 8.8%. This leads to an EPS of $4.56 in the final year of projections relative to the current EPS of $3.69. With a current profit margin of 6.3%, this movement will result in a margin of 15% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Southwest Gas Holdings, I’ve put together three pertinent factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Management:Have insiders been ramping up their shares to take advantage of the market’s sentiment for Southwest Gas Holdings’s future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Southwest Gas Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.