Southwest Gas (NYSE:SWX) & Naturgy Energy Group (OTCMKTS:GASNF) Critical Contrast

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

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%

Institutional & Insider Ownership

9.2% 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 company is poised for long-term growth.

Earnings and Valuation

This table compares Naturgy Energy Group and Southwest Gas”s 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	$1.56	21.70
Southwest Gas	$1.94 billion	3.45	$439.83 million	$7.66	12.05

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.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Naturgy Energy Group and Southwest Gas, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Naturgy Energy Group	0	0	0	0	0.00
Southwest Gas	0	1	6	1	3.00

Southwest Gas has a consensus price target of $98.29, indicating a potential upside of 6.51%. Given Southwest Gas’ stronger consensus rating and higher possible upside, analysts plainly believe Southwest Gas is more favorable than Naturgy Energy Group.

Dividends

Naturgy Energy Group pays an annual dividend of $0.71 per share and has a dividend yield of 2.1%. Southwest Gas pays an annual dividend of $2.58 per share and has a dividend yield of 2.8%. Naturgy Energy Group pays out 45.4% of its earnings in the form of a dividend. Southwest Gas pays out 33.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Southwest Gas is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Southwest Gas beats Naturgy Energy Group on 13 of the 14 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.