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Here's Why You Should Add Southwest Gas (SWX) Stock Now

Zacks Equity Research

Earnings estimates for Southwest Gas Corporation SWX have been revised upward in the past 90 days, reflecting analysts’ optimism on the stock. The Zacks Consensus Estimate for 2019 and 2020 earnings has moved up 1.3% and 1% to $3.93 and $4.24 per share, respectively.

The company purchases, distributes and transports natural gas in Arizona, Nevada and California through its subsidiaries. Let’s focus on the factors that make the stock an appropriate pick at the moment.

Zacks Rank & VGM Score

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Back tested results show that stocks with a favorable VGM Score of A or B coupled with a bullish Zacks Rank are the best investment options.

Earnings Surprise History & Long-Term Growth

The company’s average four-quarter positive earnings surprise is 30.36%.

The company’s long-term (3 to 5 years) earnings growth is pegged at 6.17%.

Price Performance

In the past five years, the stock has surged 71.4% compared with the industry’s growth of 27.7%. The upside indicates consistent return to shareholders.  

Capital Investments

Southwest Gas makes capital investments in infrastructure projects and expansion of its customer base. Currently, it expects to make capital investments worth $2.1 billion during the 2019-2021 period.

Dividend Payment

The company is raising its annual dividend for the 13th straight year. In 2019, Southwest Gas increased dividend by 10 cents year over year and the current annualized dividend is $2.18 per share. The company has a dividend yield of 2.43% compared with the Zacks S&P 500 composite’s 1.85%.

Other Key Picks

Some other top-ranked stocks from the same sector are DTE Energy Company DTE, Algonquin Power & Utilities Corp. AQN and Entergy Corporation ETR, each holding a Zacks Rank of 2.

DTE Energy pulled off an average positive earnings surprise of 12.24% in the last four quarters. The company’s long-term earnings growth is pegged at 6%.

Algonquin Power & Utilities pulled off an average positive earnings surprise of 4.07% in the last four quarters. The company’s long-term earnings growth is pegged at 7.70%.

Entergy delivered an average positive earnings surprise of 21.88% in the last four quarters. The company’s long-term earnings growth is pegged at 7%.

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