Reasons to Add Southwest Gas (SWX) to Your Portfolio Right Now
Southwest Gas Holdings Inc.’s SWX investments to further strengthen its infrastructure and accretive acquisitions will boost its performance. SWX is also gaining from improvements in economic conditions in its service areas. Given its growth opportunities, SWX makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #1 (Strong Buy) company a strong investment option at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up 3.3% in the past 60 days to $3.49.
The Zacks Consensus Estimate for 2023 revenues is pinned at $5.23 billion, implying a year-over-year increase of 5.5%.
The company delivered an average earnings surprise of 104% in the last four quarters.
Liquidity
Southwest Gas’ current ratio at the end of third-quarter 2023 was 1.9. The current ratio, being greater than one, indicates the company’s ability to meet its future short-term liabilities without difficulties.
Dividend Growth
Southwest Gas has been consistently paying dividends and increasing its shareholders’ value. The utility has been paying dividends since 1956 and has raised its dividend consecutively since 2007. Currently, its quarterly dividend is 62 cents per share, resulting in an annualized dividend of $2.48 per share. Its current dividend yield is 4.14%, better than the Zacks S&P 500 Composite’s 1.42%. The company targets a steady dividend payout ratio of 55-65% in the long run.
Systematic Investments
Southwest Gas strategically plans its investments to meet the growing demand for safe, reliable and affordable energy solutions. The company expects a capital investment of $2 billion during 2023-2025. In the first nine months of 2023, the company invested $911.5 million.
The capital expenditure guidance for its Natural Gas Distribution segment was increased to the range of $720-$740 million from $700-$720 million to support customer growth, system improvements and pipe replacement programs.
Price Performance
In the past six months, the stock has returned 4.9% against the industry’s average 6.8% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are Sempra Energy SRE, PPL Corporation PPL and Consolidated Edison ED, each holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
SRE’s long-term (three to five years) earnings growth rate is 4.95%. The company delivered an average earnings surprise of 9% in the last four quarters.
PPL’s long-term earnings growth rate is 7.42%. The consensus estimate for the company’s 2023 EPS is pegged at $1.58, indicating a year-over-year improvement of 12.1%.
ED’s long-term earnings growth rate is 2%. The consensus estimate for the company’s 2023 EPS is pegged at $4.94, indicating a year-over-year improvement of 8.6%.
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PPL Corporation (PPL) : Free Stock Analysis Report
Sempra Energy (SRE) : Free Stock Analysis Report
Consolidated Edison Inc (ED) : Free Stock Analysis Report
Southwest Gas Corporation (SWX) : Free Stock Analysis Report
