Contributions From Rising Customer Base, Strategic Investments Aid SWX

Southwest Gas SWX benefits from contributions from an expanding customer base, driven by regional economic development and new rates. Debt management and systematic capital investment to strengthen infrastructure boost the company’s performance.

The company’s long-term (three to five years) earnings growth is projected at 9.16%.

SWX’s Tailwinds

Southwest Gas continues to benefit from economic development in its service territory, which leads to an increase in demand, supporting a stable flow of revenues. The company upgraded its infrastructure in 2025 by installing 37,000 first-time meter sets, effectively supporting its steady customer base growth of 1.6% during the year.

An expanding customer base, strong operational efficiency and new rate structures drive the company's projected annual net income growth to 9.5-11.5% for 2026-2030.

The company plans to invest $1.25 billion in 2026 and expects a capital investment of $6.3 billion in 2026-2030. The above expenditure will enhance the company’s infrastructure while improving service reliability, ensuring consistent delivery and supporting long-term growth across its expanding customer base.

SWX is utilizing lower debts than its industry peers to run its operation and has enough liquidity to meet its current obligations. This reflects that the company can fund its capital expenditure more efficiently with less dependence on external borrowing. The company maintains a strong financial flexibility.

SWX’s Headwinds

Southwest Gas relies on interstate pipelines for gas transportation from producers. Any disruptions or limited access can affect supply flow, potentially affecting its ability to consistently meet customer demand. This can affect the company’s financial performance.

Price Performance of SWX

In the past three months, Southwest Gas shares have rallied 5% compared with the industry’s 7.4% growth.

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SWX’s Zacks Rank & Stocks to Consider

Southwest Gas currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same industry are Atmos Energy ATO, Chesapeake Utilities CPK and Northwest Natural NWN. These three companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ATO, CPK and NWN's dividend yields are 2.16%,2.15% and 3.71%, respectively.

The Zacks Consensus Estimate for Atmos Energy, Chesapeake Utilities and Northwest Natural 2026 earnings is pegged at $8.22,$6.51 and $3.05 per share, suggesting year-over-year growth of 10.19%,8.32% and 4.10%, respectively.

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Southwest Gas Corporation (SWX): Free Stock Analysis Report

Chesapeake Utilities Corporation (CPK): Free Stock Analysis Report

Atmos Energy Corporation (ATO): Free Stock Analysis Report

Northwest Natural Gas Company (NWN): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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