Southwest Gas SWX gains from a regulated structure, rising natural gas demand, expanding customer base driven by regional economic growth, which support its overall financial performance. Its strategic capital investment to support infrastructure development also boosts long-term growth.
This Zacks Rank #3 (Hold) company faces risks from subsidiary dependence and pipeline disruptions.
SWX’s Tailwinds
Southwest Gas continues to benefit from rising natural gas demand and its regulated structure, which support a stable revenue flow. SWX also benefits from the full separation of Centuri, enhancing its risk profile and strengthening its focus as a pure-play natural gas utility.
The company is benefiting from an expanding customer base fueled by strong economic development and population growth across its service territory. This creates additional demand for natural gas services, supporting long-term revenues and earnings visibility. Southwest Gas achieved 1% net customer growth and installed 37,000 first-time meter sets in the 12 months ended Dec. 31, 2025. It anticipates 1.4% growth in customers per year through 2030.
SWX’s strategic capital investment for infrastructure development improves operational efficiency, enhances service reliability and supports long-term growth. Southwest Gas invested $186.3 million in the first quarter of 2026 and plans to invest $1.25 billion in 2026, including $925 million for gas infrastructure and $325 million for Great Basin’s 2028 expansion project. The company aims to invest $6.3 billion in 2026-2030, with 73% allocated to Southwest Gas and 27% to the Great Basin project. These investments are projected to drive a 9.5-11.5% rate base growth and support 12-14% long-term adjusted earnings per share (EPS) growth through 2030.
SWX’s Headwinds
Southwest Gas does not own any significant assets other than the stock of its operating subsidiaries, making it dependent on those units to meet its financial needs. The company’s ability to pay dividends depends on its units’ net income and cash flows.
The company’s natural gas distribution operations face inherent hazards, including gas leaks, fires, catastrophic accidents, explosions and pipeline ruptures. These events can lead to unexpected service disruptions, property damage or personal injury, potentially impacting business operations.
Price Performance of SWX
In the past six months, Southwest Gas shares have gained 8.5% against the industry’s 0.2% fall.
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Stocks to Consider
Some better-ranked stocks in the same sector are Duke Energy DUK, Consolidated Edison ED and PG&E Corporation PCG. All the stocks carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DUK, ED and PCG have dividend yields of 3.43%, 3.32% and 1.19%, respectively, which are better than the Zacks S&P 500 Composite’s yield of 1.44%.
The Zacks Consensus Estimate for Duke Energy, Consolidated Edison and PG&E 2026 EPS are pegged at $6.71, $6.09 and $1.65, suggesting year-over-year growth of 6.34%, 6.84% and 10%, respectively.
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Pacific Gas & Electric Co. (PCG): Free Stock Analysis Report
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Consolidated Edison Inc (ED): Free Stock Analysis Report
Southwest Gas Corporation (SWX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).