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Southwest Gas (SWX) Up 11.7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Southwest Gas (SWX - Free Report) . Shares have added about 11.7% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Southwest Gas Q4 Earnings and Revenues Beat Estimates
Southwest Gas Holdings Inc. recorded fourth-quarter 2023 operating earnings of $1.13 per share, which beat the Zacks Consensus Estimate of 97 cents by 16.5%. The bottom line increased 2.5% from the year-ago quarter’s figure of $1.16.
SWX reported earnings of $3.36 for 2023 compared with $3 per share in 2022, which reflects a year-over-year increase of 12%.
Total Revenues
Operating revenues totaled $1.3 billion in the quarter, which surpassed the Zacks Consensus Estimate of $1.2 million by 8.3%. However, the top line decreased 7.1% from $1.4 billion in the prior-year quarter.
SWX reported total revenues of $5.4 billion for 2023 compared with $4.9 billion in 2022, which reflects a year-over-year increase of 10.2%.
Highlights of the Release
Utility infrastructure service expenses were $612.3 million, down 12.4% from the year-ago quarter’s level of $699.7 million.
Total operating income was $18.5 million, down 43.9% from the year-ago quarter’s level of $33 million.
The company continues to gain from strong customer additions. Total system throughput in 2023 was 226.5 million dekatherms, up 1.8% compared to 2022.
Financial Highlights
Cash and cash equivalents, as of Dec 31, 2023, were $106.5 million compared with $123 million as of Dec 31, 2022.
The long-term debt, less current maturities, amounted to $4.6 billion as of Dec 31, 2023, compared with $4.4 billion as of Dec 31, 2022.
Southwest Gas’ net cash provided by operating activities for the year ended Dec 31, 2023 was $509.2 million compared with $407.4 million in the year-ago period.
2024 Guidance
Southwest Gas’ guidance for the Natural Gas Distribution segment’s net income in 2024 is in the range of $228-$238 million. The 2024 capital expenditure is expected to be $830 million to support customer growth, system improvements and pipe replacement programs.
Capital expenditure is expected to be $2.4 billion for 2024-2026. The utility rate base is projected to witness a CAGR in the range of 6.5-7.5%. The company anticipates customer growth of more than 1.6% annually in the 2024-2026 period.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.35% due to these changes.
VGM Scores
Currently, Southwest Gas has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 these revisions indicates a downward shift. It's no surprise Southwest Gas has a Zacks Rank #4 (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, ONE Gas (OGS - Free Report) , a stock from the same industry, has gained 8.3%. The company reported its results for the quarter ended December 2023 more than a month ago.
ONE Gas reported revenues of $605.92 million in the last reported quarter, representing a year-over-year change of -26%. EPS of $1.27 for the same period compares with $1.23 a year ago.
For the current quarter, ONE Gas is expected to post earnings of $1.64 per share, indicating a change of -10.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.8% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for ONE Gas. Also, the stock has a VGM Score of C.
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Southwest Gas (SWX) Up 11.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Southwest Gas (SWX - Free Report) . Shares have added about 11.7% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Southwest Gas Q4 Earnings and Revenues Beat Estimates
Southwest Gas Holdings Inc. recorded fourth-quarter 2023 operating earnings of $1.13 per share, which beat the Zacks Consensus Estimate of 97 cents by 16.5%. The bottom line increased 2.5% from the year-ago quarter’s figure of $1.16.
SWX reported earnings of $3.36 for 2023 compared with $3 per share in 2022, which reflects a year-over-year increase of 12%.
Total Revenues
Operating revenues totaled $1.3 billion in the quarter, which surpassed the Zacks Consensus Estimate of $1.2 million by 8.3%. However, the top line decreased 7.1% from $1.4 billion in the prior-year quarter.
SWX reported total revenues of $5.4 billion for 2023 compared with $4.9 billion in 2022, which reflects a year-over-year increase of 10.2%.
Highlights of the Release
Utility infrastructure service expenses were $612.3 million, down 12.4% from the year-ago quarter’s level of $699.7 million.
Total operating income was $18.5 million, down 43.9% from the year-ago quarter’s level of $33 million.
The company continues to gain from strong customer additions. Total system throughput in 2023 was 226.5 million dekatherms, up 1.8% compared to 2022.
Financial Highlights
Cash and cash equivalents, as of Dec 31, 2023, were $106.5 million compared with $123 million as of Dec 31, 2022.
The long-term debt, less current maturities, amounted to $4.6 billion as of Dec 31, 2023, compared with $4.4 billion as of Dec 31, 2022.
Southwest Gas’ net cash provided by operating activities for the year ended Dec 31, 2023 was $509.2 million compared with $407.4 million in the year-ago period.
2024 Guidance
Southwest Gas’ guidance for the Natural Gas Distribution segment’s net income in 2024 is in the range of $228-$238 million. The 2024 capital expenditure is expected to be $830 million to support customer growth, system improvements and pipe replacement programs.
Capital expenditure is expected to be $2.4 billion for 2024-2026. The utility rate base is projected to witness a CAGR in the range of 6.5-7.5%. The company anticipates customer growth of more than 1.6% annually in the 2024-2026 period.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.35% due to these changes.
VGM Scores
Currently, Southwest Gas has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 these revisions indicates a downward shift. It's no surprise Southwest Gas has a Zacks Rank #4 (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, ONE Gas (OGS - Free Report) , a stock from the same industry, has gained 8.3%. The company reported its results for the quarter ended December 2023 more than a month ago.
ONE Gas reported revenues of $605.92 million in the last reported quarter, representing a year-over-year change of -26%. EPS of $1.27 for the same period compares with $1.23 a year ago.
For the current quarter, ONE Gas is expected to post earnings of $1.64 per share, indicating a change of -10.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.8% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for ONE Gas. Also, the stock has a VGM Score of C.