Earnings estimates for Southwest Gas Corporation (SWX - Free Report) have been revised upward over the past 30 days, reflecting analyst’s confidence in the stock. The Zacks Consensus Estimate for 2018 bottom line has moved 3.6% moved to $3.71 per share.
Southwest Gas is an energy holding company based in Las Vegas, NV, which is a regulated utility and provides natural gas service and is a full-service underground piping contractor that primarily serves utility companies.
Let’s focus on the factors that make Southwest Gas an attractive stock to hold on to for greater returns.
Price Appreciation: Shares of Southwest Gas have rallied 17.6% in the past six months, outperforming its industry’s increase of 11.1%. The stock carries a Zacks Rank #2 (Buy).
Earnings Surprise History & Improving Top Line: The company delivered earnings of 44 cents per share in second-quarter 2018, beating the Zacks Consensus Estimate of 31 cents by 41.9%. The company also boasts an encouraging earnings surprise history, beating estimates in three of the last four quarters, the average beat being 24.17%.
Focus on the core assets coupled with industry knowledge will enable the company to increase its operational efficiency as well as maximize its financial performance. The Zacks Consensus Estimate for 2018 and 2019 bottom line reflects year-over-year growth of 2.5% and 2.9%, respectively.
Infrastructure Replacement & Capex Plan: Companies distributing natural gas require a huge amount of capital spending to fund infrastructure needs. Over the past decade, the company’s expenditure to build, replace and upgrade its aging infrastructure has increased.
The company incurred a capex of nearly $148 million for replacing its old infrastructure in 2017 and anticipates 2018 replacement capex to be approximately $217 million. Also, the company is expected to incur a capital expenditure of nearly $2 billion over the 2018-2020 period.
Customer Growth: The company consistently focuses on expanding its customer base. Over the last three years, it has added nearly 85,000 new clients and anticipates to supplement approximately 99,000 new customers over the 2018-2020 period. This burgeoned customer base would be a driving factor for the operational efficiency of the company.
Other Stocks to Consider
A few other top-ranked stocks from the Zack Utility Sector are Ameren Corporation (AEE - Free Report) , Algonquin Power & Utilities Corp. (AQN - Free Report) and IDACorp Inc. (IDA - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ameren pulled off an average positive surprise of 7.69% in all the trailing four quarters. The Zacks Consensus Estimate for 2018 EPS moved 5.6% up over the past 60 days to $3.21 per share.
Algonquin Power & Utilities delivered an average beat of 36.39%. The consensus mark for 2018 EPS has been revised 3% upward over the past 60 days to 68 cents per share.
IDACorp delivered an average beat of 10.10%. The consensus mark for 2018 EPS has been revised 2.2% upward over the past 60 days to $4.28 per share.
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