Reasons to Add Southwest Gas (SWX) to Your Portfolio Now
Southwest Gas Holdings Inc. SWX is a utility company that provides natural gas services to residential, commercial and industrial customers in the United States. The company focuses on providing safe, reliable and clean energy through consistent investments in infrastructure.
Let’s explore the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment.
Growth Projections
The Zacks Consensus Estimate for SWX’s 2023 earnings per share is pegged at $3.35, increasing 1.2% in the past 60 days.
The Zacks Consensus Estimate for current year sales stands at $5.03 billion, indicating year-over-year growth of 1.5%.
The company’s long-term (three- to five-year) earnings growth is pegged at 5%.
Debt Position & Liquidity
Southwest Gas’ current ratio at the end of second-quarter 2023 was 2.12. The ratio, being greater than one, substantiates the company’s ability to meet future debt obligations without difficulties.
Dividend History
The company has been delivering competitive dividends to its shareholders. It has paid dividends every year since 1956. Southwest Gas currently pays a quarterly dividend of 62 cents, resulting in an annual payout of $2.48 per share. This indicates 0.8% growth from 2022.
The company has increased its dividend four times in the past five years. SWX’s current dividend yield is 3.91%, better than the Zacks S&P 500 composite’s 1.67%.
Strong Long-Term Growth Plan
Southwest Gas continues to follow a systematic capital investment plan for infrastructure development. In 2023, the company plans to invest $700-$720 million. It has a robust capital expenditure plan of $2 billion for the 2023-2025 period.
With the company’s planned capital expenditures and timely rate revisions from regulatory authorities, its rate base is projected to expand at an annual rate base compound annual growth of 5-7% in 2023-2025.
Price Performance
In the past three months, shares of SWX have gained 12% against the industry’s 25.5% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks in the same sector are Atmos Energy Corp. ATO, MDU Resources Group, Inc. MDU and FirstEnergy Corp. FE, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
ATO’s long-term earnings growth rate is 7.3%. The Zacks Consensus Estimate for 2023 EPS is pegged at $6.05, implying a year-over-year improvement of 8%.
MDU’s long-term earnings growth rate is 5.8%. The stock boasts an average earnings surprise of 14.16% in the last four quarters.
FE’s long-term earnings growth rate is 6.4%. The Zacks Consensus Estimate for 2023 EPS is pegged at $2.53, implying a year-over-year improvement of 5%.
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FirstEnergy Corporation (FE) : Free Stock Analysis Report
Southwest Gas Corporation (SWX) : Free Stock Analysis Report
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MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report
