How does southwest gas make money?

southwest gas generates $3.7B in annual revenue (annual revenue).

What is SWX's XVARY composite score?

southwest gas (SWX) has an XVARY composite score of 66/100, rated average. This combines growth, value, risk, and momentum factors.

SWX — southwest gas stock analysis

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what it is

Southwest Gas delivers natural gas to homes and businesses in Arizona, Nevada, and California.

how it gets paid

Last year Southwest Gas made $3.7B in revenue. Residential was the main engine at about 68% of revenue mix.

what just happened

Latest quarterly EPS came in at $1.36, below the $1.41 estimate.

At a glance

B++ balance sheet — above average — nothing keeping you up at night

5/100 earnings predictability — expect surprises

22.7x trailing p/e — priced about right

3.0% dividend yield — cash in your pocket every quarter

6.5% return on capital — normal for a regulated gas utility

xvary composite: 66/100 — average

What they do

Southwest Gas delivers natural gas to homes and businesses in Arizona, Nevada, and California.

Regulated utility → the state lets it earn an approved return on its gas network → your bill keeps showing up even when the economy slows. Southwest Gas serves 2.3 million customers across three states, so you are paying for a footprint that is hard to replicate and even harder to displace.

energy mid-cap regulated-utility rate-base-growth income

How they make money

$3.7B annual revenue

Residential

68% of mix

Small commercial

20% of mix

Large commercial and industrial

5% of mix

Transportation

7% of mix

The products that matter

delivers regulated gas service

Natural Gas Utility

$3.7B revenue · 10.7% net margin

it is the core business, generating $3.7B in annual revenue while keeping 10.7 cents of profit from every $1 of sales.

regulated moat

capital return to shareholders

Dividend

3.0% yield

the 3.0% dividend yield is part of why investors stay here, but a yield alone does not offset weak returns on capital.

income support

regulatory earnings engine

Rate Case Economics

AZ / NV rate cases · late feb 2026 window

management was expected to file in arizona and nevada around late february 2026—after this page’s feb 20 update—so treat the exact stamp date as a catalyst window, not something this snapshot already confirms as filed.

catalyst watch

Key numbers

2.3M

customers served

That customer base is the moat in plain English. Utilities win by owning territory and billing it for decades.

22.7x

trailing p/e

You are paying a full utility multiple for a business with projected sales growth of -4.5%.

$3.5B

long-term debt

Debt funds the network, but it also turns every rate decision into a financing story.

3.0%

dividend yield

You are getting income, but not enough to ignore execution risk if the stock only reaches $92.

Financial health

B++

strength

balance sheet grade B++ — above average financial health
risk rank 2 — safer than 80% of stocks
price stability 85 / 100
long-term debt $3.5B (37% of capital)
net profit margin 10.7% — keeps 11 cents of every dollar in revenue
return on equity 9% — $0.09 profit for every $1 investors have put in

B++ — functional but not a standout on the balance sheet.

Total return vs. market

You invested $10,000 in SWX 3 years ago → it's now worth $14,220.

The index would have given you $13,880.

same period. same starting point. SWX beat the market by $340.

source: institutional data · total return

What just happened

missed estimates

Latest quarterly EPS came in at $1.36, below the $1.41 estimate.

$3.8B sits next to ~$3.7B FY revenue—it is not a single quarter (that would annualize far above the utility’s scale). Treat it as LTM / post-Centuri mix or a mis-tagged line. vs. prior year % is not comparable across the separation. Cleaner read: 2026 adjusted EPS guide $4.17–$4.32.

~$925M

Q revenue (approx.)

$1.36

eps

10.7%

net margin (FY)

the number that mattered

The miss versus estimates was small at 3.55%, but for a utility, small misses tend to matter because the whole pitch is stability.

southwest gas holdings has completed its seperation from centuri.

during the second half of 2025, the company completed the previously announced registered public offering of centuri holdings stock.
centuri was previously the company’s utility infrastructure services division.

a lion’s share of the $525 million in proceeds were used to pay down debt under a term loan and revolving credit facility. remaining proceeds are likely to be applied to help support southwest gas’ capital projects (see below), dividends payments, and balance sheet health. vs. prior year comparisons in 2025 and 2026 are not meaningful, but there are various catalysts. (the company will probably provide 2026 guidance during its fourth-quarter earnings presentation, which was expected after we went to press with this report.) the biggest and most immediate is the likelihood of a favorable outcome on the regulatory front. management was expected to file cases in arizona and nevada in early 2026, seeking the approval for higher rates, as well as alternative forms of rate-making. also, in the early part of the new year, southwest likely implemented new rates for energy supplied to customers in california. with ample capital in place, this natural gas regulated business possesses the means to support expansion in service areas. specifically, robust energy demand has the potential to power growth at great basin (also known as the northern nevada interstate pipeline) through its expansion. a reduction in debt and the ensuing improvement across the company’s risk profile ought to help in many ways.
specifically, it has enhanced credit ratings, which ought to aid in lowering borrowing costs, and boost access to capital.
this should come in handy if the company gets approval for the $1.7 billion great basin gas transmission expansion project (expected in 2028.) too, we think the company will be better able to hike its dividend in the long term.

our projections suggest southwest shares, unranked due to the centuri transaction, hold limited appeal over the 3 to 5-year time frame.
the issue may attract income seekers, however, thanks to the 3.0% dividend yield.

source: company earnings report, 2026

What could go wrong

the #1 risk is arizona rate-case execution.

!

high

arizona rate-case execution

the company filed its general rate case with the ACC in February 2026. if regulators do not give SWX the economics it wants, the earnings story gets thinner fast.

this matters because the stock already trades at 22.7x trailing earnings.

∘

med

thin earnings visibility

earnings predictability is 5/100. in human terms, this is a relatively safe stock with a noisier earnings line than you would expect.

when predictability is this low, the market gives you less benefit of the doubt.

∘

med

debt and financing pressure

long-term debt is $3.5B, or 37% of capital. that is manageable, but it reduces flexibility if rate outcomes disappoint or capital needs rise.

a utility can carry debt. it just cannot pretend debt is free.

~

low

limited upside if growth stays ordinary

the 3–5 year target midpoint is $92 versus a current price of $82.87. that is a decent path, but it is not a huge margin for disappointment.

the stock can be fine and still feel slow.

all four risks run through the same math: $3.7B of revenue, a 10.7% net margin, and $3.5B of long-term debt leave some cushion, but not much room for regulatory slippage.

source: institutional data · regulatory filings · risk analysis

Pay attention to

catalyst

arizona general rate case

filed feb 27, 2026. this is the calendar item that matters most because regulated returns drive the earnings path.

metric

earnings predictability at 5 / 100

the business looks safer than the earnings line. if that score stays this low, investors will keep treating upside cautiously.

trend

institutional buying streak

181 buyers versus 129 sellers in 3q2025 and 66.4M shares held. if that flow reverses, the defensive-holder base gets less supportive.

risk

$3.5B debt against ordinary returns

37% of capital is tied up in long-term debt while return on capital is only 6.5%. that spread is manageable, but it deserves watching.

Analyst rankings

earnings predictability

5 / 100

in human-speak, analysts do not trust the earnings line to stay smooth.

risk rank

2

safer than 80% of stocks. this is the utility profile showing up where it should.

price stability

85 / 100

the stock is steadier than most. you are not buying this for chaos.

source: institutional data

Institutional activity

institutions have been net buying for 3 consecutive quarters — 181 buyers vs. 129 sellers in 3q2025. total institutional holdings: 66.4M shares. net buying for 3 quarters.

source: institutional data · 1q2025-3q2025

source: institutional data

Price targets

3-5 year target range

$70 $113

$83 current price

$92 target midpoint · +11% from current · 3-5yr high: $115 (+40% · 11% ann'l return)

source: institutional data · analyst targets

The deep dive

SWX

xvary deep dive

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the full analysis is in the works.

what you'll get

dcf valuation model

bull / base / bear scenarios

competitive moat breakdown

quarterly earnings tracker

operating model projections

risk matrix with kill criteria

original price target + conviction

updated with every earnings

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