Southwest Gas (NYSE:SWX – Get Free Report) and AltaGas (OTCMKTS:ATGFF – Get Free Report) are both utilities companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, analyst recommendations, risk, dividends, profitability and institutional ownership.
Dividends
Southwest Gas pays an annual dividend of $2.58 per share and has a dividend yield of 2.9%. AltaGas pays an annual dividend of $1.50 per share and has a dividend yield of 4.0%. Southwest Gas pays out 33.7% of its earnings in the form of a dividend. AltaGas pays out 136.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Insider & Institutional Ownership
92.8% of Southwest Gas shares are owned by institutional investors. Comparatively, 28.7% of AltaGas shares are owned by institutional investors. 0.6% of Southwest Gas shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Southwest Gas | $1.74 billion | 3.70 | $439.83 million | $7.66 | 11.62 |
| AltaGas | N/A | N/A | N/A | $1.10 | 34.40 |
Southwest Gas has higher revenue and earnings than AltaGas. Southwest Gas is trading at a lower price-to-earnings ratio than AltaGas, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Southwest Gas and AltaGas’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Southwest Gas | 31.85% | 6.91% | 2.64% |
| AltaGas | N/A | N/A | N/A |
Analyst Recommendations
This is a summary of current recommendations for Southwest Gas and AltaGas, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Southwest Gas | 0 | 1 | 7 | 0 | 2.88 |
| AltaGas | 0 | 0 | 6 | 0 | 3.00 |
Southwest Gas currently has a consensus price target of $98.29, indicating a potential upside of 10.46%. Given Southwest Gas’ higher possible upside, equities analysts plainly believe Southwest Gas is more favorable than AltaGas.
Summary
Southwest Gas beats AltaGas on 10 of the 13 factors compared between the two stocks.
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.
About AltaGas
AltaGas Ltd. operates as an energy infrastructure company in North America. The company operates through Utilities and Midstream segments. The Utilities segment owns and operates franchised, cost-of-service, rate-regulated natural gas distribution and storage utilities in Maryland, Virginia, Delaware, Pennsylvania, Ohio, and the District of Columbia serving approximately 1.6 million customers. This segment also provides interstate natural gas transportation and storage services. The Midstream segment engages in the natural gas gathering, processing, and extraction with 1.2 billion cubic feet per day (Bcf/d) of extraction processing capacity and approximately 1.2 Bcf/d of raw field gas processing capacity; fractionation and liquids handling business; and natural gas and natural gas liquids marketing activities. It also engages in LPG exports and distribution, logistics, trucking and rail terminals, and liquid storage businesses. In addition, the company operates gas-fired power generation and distribution assets with a generating capacity of 508 megawatt of power in California. It serves residential, commercial, and industrial customers. AltaGas Ltd. was founded in 1994 and is headquartered in Calgary, Canada.
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