Southwest Gas (SWX) AI Stock Analysis

• Market Cap: $5.65B
• Dividend Yield: 3.16%
• Average Volume (3M): 388.51K
• Price to Earnings (P/E): 29.2
• Beta (1Y): 0.43
• Revenue Growth: -10.07%
• EPS Growth: 5.98%
• Country: US
• Employees: 11,122
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Gas
• EPS (TTM): -0.18
• Shares Outstanding: 71,979,294
• 10 Day Avg. Volume: 473,904
• 30 Day Avg. Volume: 388,507
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.79
• Enterprise Value/Revenue: 2.13
• Enterprise Value/Gross Profit: 9.35
• Enterprise Value/Ebitda: 9.74
• 1Y Price Target: $86.00
• Price Target Upside: 9.54% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 67 Neutral
• Price Target: $86.00 ▲(9.54% Upside)

Southwest Gas's overall stock score is driven by strong earnings performance and positive technical indicators. However, financial performance is hindered by high leverage and negative cash flow growth. The valuation suggests potential overvaluation, but the dividend yield offers some compensation. Corporate events and strategic expansions provide additional growth potential.

Positive Factors

Regulatory Advancements

The regulatory advancements, including a significant rate base increase, enhance revenue potential and support long-term growth.

Strategic Divestment

The strategic divestment of Centuri Holdings strengthens the balance sheet, providing funds for debt repayment and future investments.

Great Basin Expansion

The Great Basin expansion enhances capacity and market positioning, supporting future revenue growth and operational scale.

Negative Factors

High Leverage

High leverage can increase financial risk, limiting flexibility and potentially impacting long-term financial stability.

Negative Cash Flow Growth

Negative cash flow growth indicates challenges in generating cash, which may affect the company's ability to fund operations and investments.

Interest Expense Increase

Rising interest expenses can erode profitability and reduce available capital for growth initiatives, impacting long-term financial health.

Southwest Gas Business Overview & Revenue Model

Company Description

Southwest Gas Holdings, Inc., through its subsidiaries, distributes and transports natural gas in Arizona, Nevada, and California. The company operates through Natural Gas Distribution, Utility Infrastructure Services, and Pipeline and Storage segments. It also provides trenching, installation, and replacement of underground pipes, as well as maintenance services for energy distribution systems. As of December 31, 2021, it had 2,159,000 residential, commercial, industrial, and other natural gas customers. Southwest Gas Holdings, Inc. was incorporated in 1931 and is headquartered in Las Vegas, Nevada.

How the Company Makes Money

Southwest Gas generates revenue primarily through the sale of natural gas to its utility customers. The company earns money by charging customers for the gas consumed as well as for the distribution of that gas through its pipeline network. Revenue is driven by the volume of gas sold, which is influenced by factors such as customer demand, weather conditions, and regulatory pricing structures. Additionally, the company may earn income through its Infrastructure segment, which includes construction services for natural gas pipelines and related facilities. Regulatory frameworks play a significant role in how Southwest Gas sets its rates, as they must obtain approval from state utility commissions to adjust prices. The company also benefits from partnerships with other energy providers and infrastructure companies, which can enhance its service offerings and operational efficiency.

Southwest Gas Financial Statement Overview

Summary

Southwest Gas demonstrates strengths in operational efficiency and cash generation, but faces challenges with growth and leverage. The company should focus on enhancing profitability and reducing financial leverage to improve its financial health.

Income Statement

Southwest Gas shows a mixed performance in its income statement. The gross profit margin is robust at around 22% for TTM, indicating efficient cost control relative to revenue. However, the net profit margin is relatively low at approximately 4.66%, suggesting limited profitability after expenses. The revenue growth rate has declined by 11.25% from the previous year, reflecting challenges in maintaining sales momentum. EBIT and EBITDA margins are stable, with TTM figures of 10.9% and 21.1% respectively, indicating consistent operational efficiency.

Balance Sheet

The balance sheet reflects some concerns over leverage and equity strength. Southwest Gas has a high debt-to-equity ratio of 1.41, indicating significant reliance on debt financing, which could pose risks in a rising interest rate environment. The return on equity is relatively low at 6.29%, suggesting modest returns generated from shareholders' equity. The equity ratio stands at 29.63%, pointing to a moderate proportion of assets financed by equity, which is reasonable for the industry but leaves room for improvement in financial stability.

Cash Flow

The cash flow statement presents a positive picture with strong operational cash generation. The operating cash flow to net income ratio is high at 4.91, indicating robust cash earnings compared to reported profits. However, free cash flow has shown volatility with a notable decline in the TTM. The free cash flow to net income ratio stands at 0.85, suggesting that the company is generating sufficient cash to cover net income but needs to strengthen its free cash flow position for greater financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.77B	5.11B	5.43B	4.96B	3.68B	3.30B
Gross Profit	1.08B	1.01B	1.02B	994.87M	820.93M	818.49M
EBITDA	1.04B	976.78M	930.54M	439.87M	726.57M	735.01M
Net Income	193.73M	198.81M	150.89M	-1.62B	200.78M	232.32M
Balance Sheet
Total Assets	12.21B	12.02B	11.87B	13.20B	12.77B	8.74B
Cash, Cash Equivalents and Short-Term Investments	355.63M	363.79M	106.54M	123.08M	222.70M	83.35M
Total Debt	4.68B	5.06B	5.44B	5.99B	6.32B	2.88B
Total Liabilities	8.09B	8.33B	8.46B	9.98B	9.61B	5.90B
Stockholders Equity	3.67B	3.50B	3.31B	3.06B	2.95B	2.67B
Cash Flow
Free Cash Flow	14.07M	409.86M	-363.31M	-451.96M	-604.24M	-199.03M
Operating Cash Flow	923.11M	1.36B	509.21M	407.46M	111.38M	626.08M
Investing Cash Flow	-891.70M	-921.57M	150.97M	-838.90M	-3.04B	-802.07M
Financing Cash Flow	-275.29M	-176.34M	-700.79M	356.48M	3.06B	209.57M

Southwest Gas Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 78.51
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SWX, the sentiment is Positive. The current price of 78.51 is above the 20-day moving average (MA) of 78.50, above the 50-day MA of 78.01, and above the 200-day MA of 73.38, indicating a bullish trend. The MACD of 0.31 indicates Positive momentum. The RSI at 51.26 is Neutral, neither overbought nor oversold. The STOCH value of 59.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SWX.

Southwest Gas Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NJR	76 Outperform	4.68B	11.47	13.17%	3.92%	21.88%	71.35%
SR	71 Outperform	4.54B	16.53	8.21%	4.08%	-6.65%	11.47%
CPK	70 Outperform	3.04B	22.93	8.60%	2.05%	19.02%	20.13%
OGS	68 Neutral	4.56B	18.08	7.78%	3.51%	13.43%	6.49%
SWX	67 Neutral	$5.65B	29.19	5.41%	3.16%	-10.07%	5.98%
UGI	61 Neutral	7.05B	17.34	8.58%	4.57%	-0.52%	-39.42%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%

Southwest Gas Corporate Events

Southwest Gas Completes Sale of Centuri Holdings Shares

On September 5, 2025, Southwest Gas Holdings, Inc. completed the sale of 27,362,210 shares of Centuri Holdings, Inc. common stock to J.P. Morgan Securities LLC, generating approximately $524.8 million in net proceeds. This transaction marks the company’s exit from its ownership in Centuri, relinquishing its governance rights and influence over Centuri’s corporate actions.

Southwest Gas Sells Centuri Shares, Raises $325 Million

On August 11, 2025, Southwest Gas Holdings, Inc. completed an underwritten offering of 17,250,000 shares of Centuri Holdings, Inc. common stock, generating approximately $325 million in net proceeds. The company plans to use these funds for debt repayment and general corporate purposes. Concurrently, Southwest Gas also closed a private placement with Icahn Investors, selling 1,573,500 shares for approximately $31 million. As a result of these transactions, Southwest Gas no longer holds a controlling interest in Centuri and will deconsolidate its financial statements, reflecting Centuri’s results as discontinued operations.

Southwest Gas Appoints New Chief Accounting Officer

On July 2, 2025, Southwest Gas Holdings, Inc. and Southwest Gas Corporation announced the appointment of Mr. Fabio A. Pineda as Vice President/Controller/Chief Accounting Officer, effective July 17, 2025. Mr. Pineda, who has an extensive background in accounting and finance, will replace Robert J. Stefani, who will continue as Senior Vice President/Chief Financial Officer. This strategic appointment is aimed at strengthening the company’s financial leadership and ensuring continuity in its financial operations, with Mr. Pineda bringing valuable experience from his previous role at Sempra.

Southwest Gas Sells Centuri Shares for $22 Million

On July 8, 2025, Southwest Gas Holdings, Inc. completed the sale of 1,060,240 shares of Centuri Holdings, Inc. common stock to Icahn Partners LP and Icahn Partners Master Fund LP for $20.75 per share, generating approximately $22 million in net proceeds. This transaction, exempt from registration, allows Southwest Gas to maintain a 52.1% ownership in Centuri, potentially impacting its strategic positioning and financial flexibility.

Southwest Gas Amends Term Loan Agreement

On June 27, 2025, Southwest Gas Holdings, Inc. amended its Term Loan Credit Agreement, extending the maturity date to June 26, 2026, and reducing the lenders’ commitments from $550 million to $225 million. Additionally, the company entered into a new Revolving Credit Agreement with a $300 million capacity, replacing an existing facility and maturing on August 1, 2029. These financial adjustments are aimed at optimizing the company’s credit structure and financial flexibility.

Southwest Gas Amends Revolving Credit Agreement

On June 27, 2025, Southwest Gas Corporation amended its Revolving Credit Agreement originally dated August 1, 2024. The amendment introduced a swingline sub-facility and a new one-week interest period option with a rate based on Daily Simple SOFR plus a margin, potentially impacting the company’s financial flexibility and operational financing strategies.

Southwest Gas Completes Major Stock Offering

Southwest Gas Holdings, Inc. announced the completion of an underwritten offering on June 18, 2025, where it sold 11,212,500 shares of Centuri Holdings, Inc. common stock, generating net proceeds of approximately $225 million. The company plans to use these proceeds to repay outstanding debt, while maintaining a majority stake in Centuri. Additionally, a concurrent private placement with Icahn Partners LP is expected to raise approximately $22 million, contingent upon regulatory approval.

Southwest Gas Closes 2028 Expansion Project Season

On June 5, 2025, Southwest Gas Holdings, Inc. announced that its subsidiary, Great Basin Gas Transmission Company, successfully closed its 2028 Expansion Project Binding Open Season. This development is significant for the company’s operations as it reflects progress in their expansion efforts, potentially enhancing their market positioning in the gas transmission industry.