Southwest Gas (SWX) | News Based Sentiment Analysis

• On October 1, 2025, Southwest Gas finalized the divestiture of its entire stake in Centuri Holdings, consisting of 27,362,210 shares, generating approximately $525 million in net proceeds. This strategic move allows Southwest Gas to refocus its capital allocation, potentially boosting financial flexibility and shareholder returns.
• Centuri Holdings simultaneously announced it had secured nearly $400 million in new customer awards across the U.S. utility and energy sectors on October 1, 2025, with approximately 70% coming from new projects and a master service agreement. This demonstrates Centuri’s strong market position and continued demand for its services.
• Major shareholder Carl C. Icahn reduced his stake in Southwest Gas by 19.91% on September 25, 2025, selling 1,500,000 shares for a total of $116,865,000.00. Despite this sale, Icahn still holds 6,032,604 shares, representing 8.38% of the company, and the stock has seen a 0.31% price gain since the transaction.
• Southwest Gas reported Q3 earnings on August 6th, beating analyst estimates with $0.53 EPS (versus an expected $0.42), but revenue missed expectations at $1.12 billion (compared to $1.17 billion expected), representing a 5.2% year-over-year decrease. The company also declared a quarterly dividend of $0.62 per share, payable December 1, 2025, yielding 3.2% annually.
• Several institutional investors adjusted their positions in Southwest Gas during the second quarter, with Adage Capital Partners increasing their shares by 4.5% (70,000 shares, worth $120,512,000), and Geode Capital Management growing their holdings by 3.6% (54,318 shares, worth $114,902,000). Overall, institutional investors own 92.77% of Southwest Gas stock as of October 4, 2025.
• Analysts maintain a "Moderate Buy" consensus rating for Southwest Gas as of October 3-4, 2025, with an average price target of $82.33, representing a 5.01% upside from the current price of $78.41. Jefferies Financial Group recently raised its price objective to $88.00 with a "buy" rating on September 10th.
• Valuation checks by GuruFocus and Simply Wall St indicate Southwest Gas is considered "modestly overvalued" as of October 3, 2025, with a GF Value of $65.16 compared to a current price of $78.22. The company’s high dividend payout ratio of 92% and a projected long-term dividend growth rate of only 0.38% suggest limited potential for dividend expansion.

The Investment Story: October was a month of strategic repositioning for Southwest Gas, marked by the completion of the Centuri divestiture and mixed Q3 earnings. While the divestiture provides financial flexibility, investor sentiment is tempered by revenue misses and valuation concerns.

What It Means for Investors: The $525 million from the Centuri sale offers Southwest Gas options for debt reduction or investment, but Icahn’s stake reduction and overvaluation signals suggest caution. The consistent dividend provides some stability, but limited growth potential is a key consideration.

Looking Ahead: Investors should monitor Southwest Gas’s capital allocation plans and track Centuri’s performance post-separation. Further analyst updates and Q4 earnings will be crucial in determining the company’s trajectory.

The Bottom Line: October’s developments present a mixed picture for Southwest Gas. The divestiture is a positive step, but investors should carefully weigh the company’s valuation, earnings trends, and the impact of major shareholder activity before making investment decisions.