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Why Is Southwest Gas (SWX) Up 7.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Southwest Gas (SWX - Free Report) . Shares have added about 7.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Southwest Gas due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Southwest Gas Up 2.8% on Q3 Sales Beat, Earnings Miss
Southwest Gas Holdings Inc. recorded third-quarter 2022 operating loss per share of 5 cents, which missed the Zacks Consensus Estimate of earnings per share of 28 cents by 117.9%. The bottom line also decreased 200% from the year-ago quarter’s earnings of 5 cents per share.
GAAP loss in the reported quarter were 18 cents narrower than the year ago quarter’s loss of 19 cents.
Total Revenues
Operating revenues of $1,125.6 million surpassed the Zacks Consensus Estimate of $1,088 million by 3.5%. The top line improved by 26.7% from $888.7 million in the prior-year quarter. Revenues also surpassed our estimate of $1,085.5 million by 0.4%.
Courtesy of the better-than-expected top-line performance of Southwest Gas Holdings, the market reacted positively and the company’s shares gained 2.8% post third-quarter earnings release.
Highlights of the Release
Total operating expenses in the third quarter amounted to $307.1 million, up 15.9% from the year-ago figure of $264.9 million, due to an increase in the net cost of gas sold, and higher operations and maintenance expenses.
The operating loss was $3.2 million, narrower than the prior-quarter’s loss of $9.1 million.
Financial Highlights
Cash and cash equivalents as of Sep 30, 2022 were $175.3 million compared with $222.7 million as of Dec 31, 2021.
The long-term debt, less current maturities, amounted to $5,865.5 million as of Sep 30, 2022 compared with $4,115.7 million as of Dec 31, 2021.
Southwest Gas’ net cash provided by operating activities for the first nine months of 2022 was $303.5 million compared to $51.5 million in the year-ago period.
Guidance
Natural Gas Distribution segment raised its 2022 capital expenditures in support of customer growth, system improvements and pipe replacement programs to $650-$675 million from its previous range of $600-$650 million. To strengthen operations, this segment aims to invest $2.5-$3.5 billion in next five years.
Utility Infrastructure Services segment expects total revenues in the range of $2.6-$2.7 billion in 2022 and $2.8-$3 billion in 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Southwest Gas has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Southwest Gas has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Southwest Gas is part of the Zacks Utility - Gas Distribution industry. Over the past month, MDU Resources (MDU - Free Report) , a stock from the same industry, has gained 1.4%. The company reported its results for the quarter ended September 2022 more than a month ago.
MDU Resources reported revenues of $1.98 billion in the last reported quarter, representing a year-over-year change of +24.7%. EPS of $0.75 for the same period compares with $0.68 a year ago.
For the current quarter, MDU Resources is expected to post earnings of $0.51 per share, indicating a change of +21.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
MDU Resources has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Why Is Southwest Gas (SWX) Up 7.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Southwest Gas (SWX - Free Report) . Shares have added about 7.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Southwest Gas due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Southwest Gas Up 2.8% on Q3 Sales Beat, Earnings Miss
Southwest Gas Holdings Inc. recorded third-quarter 2022 operating loss per share of 5 cents, which missed the Zacks Consensus Estimate of earnings per share of 28 cents by 117.9%. The bottom line also decreased 200% from the year-ago quarter’s earnings of 5 cents per share.
GAAP loss in the reported quarter were 18 cents narrower than the year ago quarter’s loss of 19 cents.
Total Revenues
Operating revenues of $1,125.6 million surpassed the Zacks Consensus Estimate of $1,088 million by 3.5%. The top line improved by 26.7% from $888.7 million in the prior-year quarter. Revenues also surpassed our estimate of $1,085.5 million by 0.4%.
Courtesy of the better-than-expected top-line performance of Southwest Gas Holdings, the market reacted positively and the company’s shares gained 2.8% post third-quarter earnings release.
Highlights of the Release
Total operating expenses in the third quarter amounted to $307.1 million, up 15.9% from the year-ago figure of $264.9 million, due to an increase in the net cost of gas sold, and higher operations and maintenance expenses.
The operating loss was $3.2 million, narrower than the prior-quarter’s loss of $9.1 million.
Financial Highlights
Cash and cash equivalents as of Sep 30, 2022 were $175.3 million compared with $222.7 million as of Dec 31, 2021.
The long-term debt, less current maturities, amounted to $5,865.5 million as of Sep 30, 2022 compared with $4,115.7 million as of Dec 31, 2021.
Southwest Gas’ net cash provided by operating activities for the first nine months of 2022 was $303.5 million compared to $51.5 million in the year-ago period.
Guidance
Natural Gas Distribution segment raised its 2022 capital expenditures in support of customer growth, system improvements and pipe replacement programs to $650-$675 million from its previous range of $600-$650 million. To strengthen operations, this segment aims to invest $2.5-$3.5 billion in next five years.
Utility Infrastructure Services segment expects total revenues in the range of $2.6-$2.7 billion in 2022 and $2.8-$3 billion in 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Southwest Gas has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Southwest Gas has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Southwest Gas is part of the Zacks Utility - Gas Distribution industry. Over the past month, MDU Resources (MDU - Free Report) , a stock from the same industry, has gained 1.4%. The company reported its results for the quarter ended September 2022 more than a month ago.
MDU Resources reported revenues of $1.98 billion in the last reported quarter, representing a year-over-year change of +24.7%. EPS of $0.75 for the same period compares with $0.68 a year ago.
For the current quarter, MDU Resources is expected to post earnings of $0.51 per share, indicating a change of +21.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
MDU Resources has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.