Examining Southwest Gas Holdings, Inc.'s (NYSE:SWX) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess SWX's latest performance announced on 30 June 2019 and compare these figures to its longer term trend and industry movements.
Did SWX perform worse than its track record and industry?
SWX's trailing twelve-month earnings (from 30 June 2019) of US$199m has declined by -4.3% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 9.7%, indicating the rate at which SWX is growing has slowed down. Why is this? Let's examine what's going on with margins and if the whole industry is facing the same headwind.
In terms of returns from investment, Southwest Gas Holdings has fallen short of achieving a 20% return on equity (ROE), recording 8.0% instead. Furthermore, its return on assets (ROA) of 3.9% is below the US Gas Utilities industry of 4.4%, indicating Southwest Gas Holdings's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Southwest Gas Holdings’s debt level, has declined over the past 3 years from 6.2% to 5.2%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 95% to 96% over the past 5 years.
What does this mean?
Southwest Gas Holdings's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. You should continue to research Southwest Gas Holdings to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SWX’s future growth? Take a look at our free research report of analyst consensus for SWX’s outlook.
- Financial Health: Are SWX’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
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 firstname.lastname@example.org. 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.