Back to top

Growth & Income

Todd Bunton

Southwest Gas Corporation

SWX

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Southwest Gas Corporation (SWX - Snapshot Report) offers investors solid growth and income at a reasonable price.

And estimates have been steadily rising after the company delivered a big beat for the fourth quarter. It is a Zacks #1 Rank (Strong Buy) stock.

Company Description

Southwest Gas provides natural gas service to 1,859,000 customers in Arizona, Nevada, and California.

The company was founded in 1931 and has a market cap of $1.9 billion.

Fourth Quarter Results

Southwest Gas delivered better than expected fourth quarter results on February 28. Earnings per share came in at $1.19, crushing the Zacks Consensus Estimate of $0.99. It was a 21% increase over the same quarter last year.

Revenue rose 11% to $517.651 million, ahead of the consensus estimate of $475.0 million. This was driven by strength in the natural gas segment and its pipeline construction subsidiary.

Overall operating income increased 19% year-over-year as the gas operating margin expanded from 59.1% to 61.8% of gas operating revenues.

Estimates Rising

Analysts have been steadily raising their estimates higher for both 2012 and 2013 since the strong Q4 results, sending the stock to a Zacks #1 Rank (Strong Buy).

It's not often that you see a utility in the elite class of Zacks #1 Rank (Strong Buy) stocks, but the strong earnings momentum here is undeniable. Take a look at the 'Magnitude' of earnings estimates for Southwest Gas over the last 90 days:

SWX: Southwest Gas Corporation

The Zacks Consensus Estimate for 2012 is now $2.63, representing 11% growth over 2011 EPS. The 2013 consensus estimate is currently $2.75, corresponding with 5% annual growth.

Solid Dividend

Southwest Gas generates solid, stable cash flow which has allowed it to pay a steady dividend that yields 2.6%.

It has increased its dividend in each of the last 5 years.

Reasonable Valuation

The valuation picture looks reasonable for SWX. Shares trade at 15.7x 12-month forward earnings, a slight discount to the industry median of 16.2x and in-line with its 10-year median.

It also trades at just 1.6x book value, which is also slightly below its peers.

The Bottom Line

With rising estimates, solid growth projections, a 2.6% yield and reasonable valuation, Southwest Gas Corporation offers attractive total return potential.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%