Southwest Gas SWX makes strategic investments to further strengthen its infrastructure and boost operations. The company is also gaining from consistent customer additions. Given its earnings growth opportunities and better debt management, SWX makes for a solid investment option in the utility sector.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.

SWX’s Growth Projections & Surprise History

The Zacks Consensus Estimate for 2025 earnings per share (EPS) has moved up 5.4% in the past 30 days to $3.73.

The Zacks Consensus Estimate for 2025 sales is pinned at $5.25 billion, indicating year-over-year growth of 2.8%.

SWX’s long-term (three to five years) earnings growth rate is 9.5%. The company delivered an average earnings surprise of 6% in the past four quarters.

SWX’s Dividend Yield

Utility optimization and cost management efforts allow the company to reward its shareholders. Upon completing the separation of Centuri, Southwest Gas plans to target a dividend payout ratio in line with that of its gas utility peers. Currently, the company’s quarterly dividend is 62 cents per share, resulting in an annualized dividend of $2.48. The company’s current dividend yield is 3.55%, better than the Zacks S&P 500 Composite’s 1.53%.

SWX’s Debt Position

Currently, Southwest Gas’ total debt to capital is 57.88%, better than the sector’s average of 59.9%. A lower ratio suggests the company is less reliant on borrowed money, reducing the risk of defaulting on debt obligations and a stronger financial position.

SWX’s Focus on Strategic Investments

Southwest Gas strategically plans its investment to meet the growing demand for safe, reliable and affordable energy solutions. The company anticipates a capital investment of $4.3 billion over the 2025-2029 period. The capital expenditure for 2025 is expected to be $880 million, supporting customer growth, system improvements and pipe replacement programs.

SWX’s Consistent Customer Growth

The company’s natural gas operations have a diversified and growing customer base across three states — Arizona, Nevada and California. Owing to strong economic growth across its service areas, the company installed 40,000 first-time meter sets in the 12 months ended March 31, 2025.

Southwest Gas anticipates 1.4% growth in customers per year through 2029. The ongoing expansion of the customer base will drive demand and improve performance of the company.

SWX’s Stock Price Performance

In the past two years, shares of the company have risen 22% compared with the industry’s 5.7% growth.

Story Continues

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Other Stocks to Consider

A few other top-ranked stocks from the same industry are UGI Corporation UGI, New Jersey Resources NJR and Spire SR, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

UGI’s long-term earnings growth rate is 5.2%. The Zacks Consensus Estimate for UGI’s fiscal 2025 sales implies year-over-year growth of 8%.

The Zacks Consensus Estimate for NJR’s fiscal 2025 EPS implies year-over-year growth of 8.9%. The Zacks Consensus Estimate for fiscal 2025 sales indicates an increase of 4.1% from the top line reported in fiscal 2024.

SR’s long-term earnings growth rate is 6.54%. The Zacks Consensus Estimate for fiscal 2025 EPS indicates year-over-year growth of 8.7%.

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

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