Business profile and recent share performance
Southwest Gas Holdings (SWX) serves about 2,281,000 natural gas customers across Arizona, Nevada, and California, with services that include tariff sales, transportation, and a pipeline transmission system with LNG storage.
The stock last closed at US$87.51, with a return of 0.7% over the past day and 2.0% over the past week, alongside a negative return of 1.1% over the past month and a 9.4% gain in the past 3 months.
Year to date, Southwest Gas Holdings shows a 9.2% total return, with a 23.5% total return over 1 year, 60.2% over 3 years, and 49.8% over 5 years.
On the earnings side, the company reports annual revenue of US$1.94b and net income of US$239.48m, with both revenue and net income growth reported at 10.8% and 13.2% respectively on an annual basis.
See our latest analysis for Southwest Gas Holdings.
The recent 9.4% three-month share price return, together with a 23.5% one-year total shareholder return, suggests momentum has been building after a weaker one-month share price patch.
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With the share price at US$87.51 and a modest 5.6% gap to the average analyst target, the stock does not appear to be a clear bargain or clearly overvalued. So is Southwest Gas Holdings undervalued, or is the market already pricing in future growth?
Most Popular Narrative: 5.3% Undervalued
Analysts see fair value for Southwest Gas Holdings at about $92.43 per share, slightly above the last close of $87.51. This frames a modest valuation gap that depends on growth, margins, and regulation.
Robust customer growth facilitated by ongoing population and economic expansion in the Southwest, with 40,000 new meter connections in the last 12 months, suggests extended demand for natural gas in core service territories, directly underpinning long-term revenue and earnings growth.
Curious what kind of revenue path, margin lift, and future P/E multiple need to line up for that fair value to work? The full narrative spells out the growth assumptions, profitability step up, and valuation reset that analysts are building into that $92.43 figure, and how it connects to today’s share price.
Result: Fair Value of $92.43 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, investors still need to weigh risks such as stricter environmental rules and project execution issues on large pipeline expansions, which could pressure earnings and valuation assumptions.
Find out about the key risks to this Southwest Gas Holdings narrative.
Another View: Earnings Multiple Paints A Richer Picture
Analysts see Southwest Gas Holdings as 5.3% undervalued against their $92.43 fair value, but the current P/E of 26.4x tells a different story. It sits above the fair ratio of 22.3x, the peer average of 17.6x, and the global Gas Utilities average of 14.4x. This points to meaningful valuation risk if sentiment cools.
If you prefer to lean on earnings multiples rather than analyst targets, this kind of premium can indicate that expectations are already reflected in the price. The key question is whether you think future results will be strong enough to maintain that gap or narrow it.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
With both risks and rewards on the table, the market view on Southwest Gas Holdings is far from one sided. Check the numbers, stress test the assumptions, and then weigh up the 2 key rewards and 2 important warning signs
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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