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Southwest Gas (SWX) Surges 6.6%: Is This an Indication of Further Gains?

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Southwest Gas (SWX - Free Report) shares soared 6.6% in the last trading session to close at $70.42. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 7.7% loss over the past four weeks.

Southwest Gas Holdings has a diversified and growing customer base, which ensures steady demand for its services. The decoupled rate structure in all three states it operates ensures a steady flow of income. The company is investing steadily to build a portfolio that will provide clean energy solution to its customers.

Planned acquisition of Riggs Distler & Company will further expand electric utility service platform of the company, while the recent decision to acquire Questar Pipeline from Dominion Energy will expand its natural gas pipeline operations and  will be accretive to earnings of the company.

This natural gas company is expected to post quarterly earnings of $0.19 per share in its upcoming report, which represents a year-over-year change of -40.6%. Revenues are expected to be $809.04 million, up 2.3% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Southwest Gas, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SWX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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