Southwest Gas Holdings, Inc. (NYSE:SWX): Immense Growth Potential?

Simply Wall St

As Southwest Gas Holdings, Inc. (NYSE:SWX) announced its earnings release on 31 March 2019, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by 7.3% next year against the higher past 5-year average growth rate of 9.5%. Currently with trailing-twelve-month earnings of US$182m, we can expect this to reach US$196m by 2020. Below is a brief commentary around Southwest Gas Holdings's earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

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Check out our latest analysis for Southwest Gas Holdings

Exciting times ahead?

The 3 analysts covering SWX view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of SWX's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:SWX Past and Future Earnings, May 15th 2019

By 2022, SWX's earnings should reach US$233m, from current levels of US$182m, resulting in an annual growth rate of 9.1%. This leads to an EPS of $4.56 in the final year of projections relative to the current EPS of $3.69. With a current profit margin of 6.3%, this movement will result in a margin of 15% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Southwest Gas Holdings, I've compiled three fundamental factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for Southwest Gas Holdings's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Southwest Gas Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.