Southwest Gas Holdings (SWX): Valuation Insights After Board Changes and S&P Upgrade Highlight Strategic Shift

Southwest Gas Holdings (SWX) just revealed an amended agreement with Carl Icahn, which allows four Icahn Group nominees to join its board. S&P Global Ratings also upgraded the company to BBB+ after a full exit from Centuri.

See our latest analysis for Southwest Gas Holdings.

After weathering some volatility earlier in the year, Southwest Gas Holdings’ recent board changes and ratings upgrade have nudged sentiment in a more positive direction. While the 1-year total shareholder return stands at a respectable 6.9%, the stock’s five-year total return of 35% points to steady long-term momentum rather than dramatic swings. Investors are watching to see if this new stability and focus result in consistent gains.

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But with those upgrades and governance shifts already in the spotlight, does Southwest Gas Holdings still fly under the radar at its current price? Or is the market already factoring in all the optimism ahead?

Most Popular Narrative: 6% Undervalued

Southwest Gas Holdings’ fair value stands at $82.5, a modest premium over the recent close at $77.53. This puts the share price near consensus expectations and frames the valuation debate.

Robust customer growth facilitated by ongoing population and economic expansion in the Southwest, with 40,000 new meter connections in the last 12 months, suggests extended demand for natural gas in core service territories, directly underpinning long-term revenue and earnings growth.

Read the complete narrative.

Curious what bold projections drive that price? The full narrative spotlights ambitious assumptions about future profit margins and a valuation multiple that could spark debate. Dig deeper to see why analysts landed on this fair value. What numbers are they really betting on?

Result: Fair Value of $82.5 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, accelerating electrification of buildings or stricter environmental regulations could change the outlook and challenge expectations for long-term demand and profitability.

Find out about the key risks to this Southwest Gas Holdings narrative.

Another View: Market Ratios Send a Different Signal

Looking at Southwest Gas Holdings through the lens of its price-to-earnings ratio tells a more cautious story. The company's current multiple of 28.8x is far higher than its global industry average of 13.8x, and it is also above the peer average of 21.6x. Compared to the fair ratio of 24.2x, the current valuation looks elevated, which may suggest less room for upside and greater risk if growth stalls. Could the market be overestimating the company's future growth potential?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Southwest Gas Holdings Narrative

If you’re thinking there’s more to the story or want to test out your own conclusions, you can start your own research in just minutes with Do it your way.

A great starting point for your Southwest Gas Holdings research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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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.

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