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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on SWX

Southwest Gas Holdings, Inc.'s recent performance was positively driven by its Q2 2025 earnings beat, with quarterly earnings of $0.53 per share exceeding the Zacks Consensus Estimate of $0.42 per share. The company's utility ROE improved to 8.3% due to regulatory progress and cost management. Additionally, the company completed the separation of Centuri Holdings, Inc. and launched a secondary public offering of Centuri common stock, driving over $470 million in debt reduction. A $0.62 per share dividend was also declared.

1.c. Company Highlights

2. Southwest Gas Holdings' Q3 2025 Earnings: A Strong Performance

Southwest Gas Holdings reported a robust financial performance in the third quarter of 2025, with earnings per share (EPS) from continuing operations improving by $0.19 per diluted share to $0.06, slightly below estimates of $0.09. The company's trailing 12-month return on equity (ROE) improved to 8.3%, demonstrating a commitment to consistent ROE improvement. Revenue growth was not the highlight, with analysts estimating a -38.5% revenue growth for the next year. Consolidated EPS for the quarter was $3.74 per diluted share, with earnings related to discontinued operations contributing $3.68 per diluted share. The company's margins were supported by rate relief and customer growth, partially offset by higher operating and maintenance expenses.

Publication Date: Nov -10

📋 Highlights
  • ROE Improvement:: Trailing 12-month return on equity (ROE) increased to 8.3%, reflecting operational efficiencies and strategic reinvestment.
  • Net Income Guidance:: Full-year net income projected near the top of the $265M to $275M range, driven by rate relief and customer growth.
  • Centuri Proceeds:: $1.4B in net sale proceeds from Centuri dispositions repaid holding company debt and funded capital reinvestment.
  • Credit Rating Upgrade:: S&P upgraded issuer and debt ratings to BBB+ with stable outlooks, enhancing financial flexibility.
  • Great Basin Expansion:: $1.2B–$1.6B project targets 1.76 BCF capacity by 2028, supported by regional demand and $18/dektherm pricing.

Financial Highlights

The company's interest expense increased by $3.8 million due to interest on the overcollected PGA balance, compared to interest income in the same quarter last year. Income taxes rose by $4.6 million, reflecting higher pretax net income. The effective tax rate on the Centuri transaction was a low 3.7%, with an estimated cash tax of $50 million. The company's strong balance sheet is evident, with nearly $800 million in consolidated cash and $700 million in liquidity available under revolvers.

Capital Structure and Liquidity

Southwest Gas Holdings completed four follow-on offerings and three concurrent private placements, generating nearly $1.4 billion of net sale proceeds, a large portion of which was used to repay all debt previously outstanding at the holding company. The company's net debt sits at just over $3 billion across the enterprise. S&P upgraded Southwest Gas Holdings' issuer and senior unsecured long-term debt credit ratings to BBB+ with stable outlooks, reflecting the company's improved credit profile.

Valuation Metrics

With a P/E Ratio of 29.71, the stock appears to be priced at a premium. However, the Dividend Yield of 3.11% provides a relatively attractive return. The EV/EBITDA ratio of 9.68 suggests that the company's enterprise value is reasonable relative to its earnings before interest, taxes, depreciation, and amortization. The ROE of 8.3% is a positive indicator, and the Net Debt / EBITDA ratio of 4.16 indicates a manageable debt burden.

Growth Prospects

The Great Basin expansion project is a significant growth opportunity, with a potential capacity of up to 1.76 BCF and a planned FERC filing in the fourth quarter of 2026. The project has a capital cost range of $1.2 billion to $1.6 billion and is targeting a November 2028 in-service date. The company is optimistic about future regulatory environments in all its jurisdictions, with new rates expected in California in 2026 and requests for alternative forms of ratemaking in Arizona and Nevada.

3. NewsRoom

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Reasons to Add Southwest Gas Stock to Your Portfolio Right Now

Dec -03

Source: zacks.com

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Creative Planning Purchases 5,132 Shares of Southwest Gas Corporation $SWX

Nov -29

Source: defenseworld.net

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Southwest Gas Names Justin S. Forsberg Chief Financial Officer

Nov -26

Source: prnewswire.com

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Southwest Gas Corporation (NYSE:SWX) Receives $84.50 Consensus Target Price from Brokerages

Nov -25

Source: defenseworld.net

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Southwest Gas Holdings Declares First Quarter 2026 Dividend

Nov -19

Source: prnewswire.com

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SWX or MDU: Which Is the Better Value Stock Right Now?

Nov -18

Source: zacks.com

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Southwest Gas Corporation $SWX Shares Acquired by Bank of New York Mellon Corp

Nov -11

Source: defenseworld.net

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Algonquin Power & Utilities Corp. Announces Appointment of Robert Stefani as Chief Financial Officer

Nov -07

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.83%)

6. Segments

Utility Infrastructure Services

Expected Growth: 4.83%

Southwest Gas Holdings, Inc.'s Utility Infrastructure Services segment growth of 4.83% is driven by increasing demand for natural gas infrastructure, expansion into new markets, and investments in pipeline modernization and replacement. Additionally, favorable regulatory environments and growing customer base contribute to the segment's growth.

Natural Gas Distribution

Expected Growth: 4.83%

Southwest Gas Holdings, Inc.'s 4.83% growth in Natural Gas Distribution is driven by increasing demand from residential and commercial customers, expansion into new markets, and investments in infrastructure upgrades and pipeline replacements. Additionally, favorable weather conditions and rising prices contribute to the growth.

Pipeline and Storage

Expected Growth: 4.83%

Southwest Gas Holdings, Inc.'s Pipeline and Storage segment growth of 4.83% is driven by increasing natural gas demand, expansion of pipeline infrastructure, and strategic acquisitions. Additionally, favorable regulatory environments, growing LNG exports, and rising shale gas production contribute to the segment's growth.

7. Detailed Products

Natural Gas Distribution

Southwest Gas Holdings, Inc. provides natural gas distribution services to residential, commercial, and industrial customers in Nevada, Arizona, and California.

Pipeline Construction Services

The company offers pipeline construction services, including design, construction, and maintenance of natural gas infrastructure.

Gas Infrastructure Services

Southwest Gas Holdings, Inc. provides gas infrastructure services, including pipeline inspection, maintenance, and repair.

Energy Services

The company offers energy services, including energy efficiency programs, renewable energy solutions, and energy management services.

Utility Services

Southwest Gas Holdings, Inc. provides utility services, including meter reading, billing, and customer service.

8. Southwest Gas Holdings, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Southwest Gas Holdings, Inc. operates in a highly regulated industry, which limits the threat of substitutes. However, the increasing adoption of renewable energy sources and energy-efficient technologies poses a moderate threat to the company's operations.

Bargaining Power Of Customers

Southwest Gas Holdings, Inc. serves a large customer base, which reduces the bargaining power of individual customers. Additionally, the company's operations are regulated, which limits the ability of customers to negotiate prices.

Bargaining Power Of Suppliers

Southwest Gas Holdings, Inc. relies on a few large suppliers for its natural gas and energy needs. While the company has some bargaining power due to its large scale of operations, suppliers still have some negotiating power.

Threat Of New Entrants

The natural gas industry is highly regulated, and new entrants face significant barriers to entry, including high capital costs and regulatory hurdles. This limits the threat of new entrants to Southwest Gas Holdings, Inc.'s operations.

Intensity Of Rivalry

The natural gas industry is highly competitive, with several large players competing for market share. Southwest Gas Holdings, Inc. faces intense competition from other gas utilities and energy companies, which can lead to pricing pressures and reduced market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 61.61%
Debt Cost 5.73%
Equity Weight 38.39%
Equity Cost 5.73%
WACC 5.73%
Leverage 160.47%

11. Quality Control: Southwest Gas Holdings, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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New Jersey Resources

A-Score: 6.7/10

Value: 6.7

Growth: 4.3

Quality: 5.3

Yield: 8.0

Momentum: 6.0

Volatility: 10.0

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ONE Gas

A-Score: 6.3/10

Value: 5.9

Growth: 4.4

Quality: 4.7

Yield: 6.0

Momentum: 7.0

Volatility: 10.0

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UGI

A-Score: 6.2/10

Value: 5.6

Growth: 2.3

Quality: 4.1

Yield: 8.0

Momentum: 8.0

Volatility: 9.0

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Atmos Energy

A-Score: 6.1/10

Value: 4.3

Growth: 4.9

Quality: 5.4

Yield: 4.0

Momentum: 8.0

Volatility: 10.0

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Southwest Gas Holdings

A-Score: 5.9/10

Value: 4.2

Growth: 5.2

Quality: 3.5

Yield: 7.0

Momentum: 6.0

Volatility: 9.7

1-Year Total Return ->

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New Fortress Energy

A-Score: 3.7/10

Value: 9.8

Growth: 6.4

Quality: 2.5

Yield: 3.0

Momentum: 0.0

Volatility: 0.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

79.08$

Current Price

79.08$

Potential

-0.00%

Expected Cash-Flows