The firm said it raised its rating on the company, which purchases, distributed, and transports natural gas to residential, commercial, and industrial customers, based on the company’s strong second quarter.
Although Southwest Gas reported net income and earnings that declined year over year, Brean said the company held its own against difficult competition.
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Separately, TheStreet Ratings team rates SOUTHWEST GAS CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate SOUTHWEST GAS CORP (SWX) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its revenue growth. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SWX's revenue growth has slightly outpaced the industry average of 9.4%. Since the same quarter one year prior, revenues rose by 10.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- SOUTHWEST GAS CORP' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SOUTHWEST GAS CORP increased its bottom line by earning $3.11 versus $2.87 in the prior year. For the next year, the market is expecting a contraction of 4.3% in earnings ($2.98 versus $3.11).
- In its most recent trading session, SWX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Gas Utilities industry average. The net income has decreased by 4.8% when compared to the same quarter one year ago, dropping from $10.11 million to $9.63 million.
- You can view the full analysis from the report here: SWX Ratings Report