Critical Survey: Southwest Gas (NYSE:SWX) versus Naturgy Energy Group (OTCMKTS:GASNY)

Naturgy Energy Group (OTCMKTS:GASNY) and Southwest Gas (NYSE:SWX) are both utilities companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, earnings, analyst recommendations, valuation and risk.

Institutional and Insider Ownership

0.0% of Naturgy Energy Group shares are held by institutional investors. Comparatively, 92.8% of Southwest Gas shares are held by institutional investors. 0.6% of Southwest Gas shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Naturgy Energy Group and Southwest Gas, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Naturgy Energy Group	0	0	3	1	3.25
Southwest Gas	0	1	6	1	3.00

Southwest Gas has a consensus price target of $98.29, suggesting a potential upside of 6.07%. Given Southwest Gas’ higher probable upside, analysts clearly believe Southwest Gas is more favorable than Naturgy Energy Group.

Profitability

This table compares Naturgy Energy Group and Southwest Gas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Naturgy Energy Group	N/A	N/A	N/A
Southwest Gas	31.85%	6.91%	2.64%

Valuation & Earnings

This table compares Naturgy Energy Group and Southwest Gas”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Naturgy Energy Group	N/A	N/A	N/A	$0.31	21.31
Southwest Gas	$1.94 billion	3.46	$439.83 million	$7.66	12.10

Southwest Gas has higher revenue and earnings than Naturgy Energy Group. Southwest Gas is trading at a lower price-to-earnings ratio than Naturgy Energy Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Naturgy Energy Group pays an annual dividend of $0.33 per share and has a dividend yield of 5.0%. Southwest Gas pays an annual dividend of $2.58 per share and has a dividend yield of 2.8%. Naturgy Energy Group pays out 105.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Southwest Gas pays out 33.7% of its earnings in the form of a dividend.

Summary

Southwest Gas beats Naturgy Energy Group on 10 of the 13 factors compared between the two stocks.

About Naturgy Energy Group

Naturgy Energy Group, S.A., together with its subsidiaries, engages in the supply, liquefaction, regasification, transport, storage, distribution, and sale of natural gas. It operates through Distribution Networks and Energy Markets segments. The company engages in the regulated gas and electricity distribution; sale of liquefied natural gas and the maritime transport business; management conventional thermal generation facilities; and generation and sale of electricity through wind, mini-hydro, solar, and cogeneration sources, as well as provision of supply management services. It serves in Spain, Australia, the United States, Argentina, Brazil, Chile, Mexico, Panama, the rest of Latin America, and internationally. The company was formerly known as Gas Natural SDG, S.A. and changed its name to Naturgy Energy Group, S.A. in June 2018. Naturgy Energy Group, S.A. was incorporated in 1843 and is based in Madrid, Spain.

About Southwest Gas

Southwest Gas Holdings, Inc., through its subsidiaries, distributes and transports natural gas in Arizona, Nevada, and California. The company operates through Natural Gas Distribution, Utility Infrastructure Services, and Pipeline and Storage segments. It also provides trenching, installation, and replacement of underground pipes, as well as maintenance services for energy distribution systems. As of December 31, 2023, it had 2,226,000 residential, commercial, industrial, and other natural gas customers. Southwest Gas Holdings, Inc. was incorporated in 1931 and is headquartered in Las Vegas, Nevada.