Contrasting Southwest Gas Corporation (SWX) and UGI Corporation (UGI)

Southwest Gas Corporation (NYSE: SWX) and UGI Corporation (NYSE:UGI) are both mid-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their risk, institutional ownership, earnings, profitability, dividends, valuation and analyst recommendations.

Dividends

Southwest Gas Corporation pays an annual dividend of $1.98 per share and has a dividend yield of 2.5%. UGI Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 2.0%. Southwest Gas Corporation pays out 61.1% of its earnings in the form of a dividend. UGI Corporation pays out 45.9% 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 Corporation has raised its dividend for 31 consecutive years and UGI Corporation has raised its dividend for 5 consecutive years. Southwest Gas Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Southwest Gas Corporation and UGI Corporation, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southwest Gas Corporation	0	3	0	0	2.00
UGI Corporation	1	1	1	0	2.00

Southwest Gas Corporation presently has a consensus target price of $79.00, suggesting a potential upside of 0.69%. UGI Corporation has a consensus target price of $46.00, suggesting a potential downside of 6.05%. Given Southwest Gas Corporation’s higher probable upside, equities research analysts clearly believe Southwest Gas Corporation is more favorable than UGI Corporation.

Valuation and Earnings

This table compares Southwest Gas Corporation and UGI Corporation’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Southwest Gas Corporation	$2.40 billion	1.56	$568.17 million	$3.24	24.22
UGI Corporation	$5.98 billion	1.42	$1.35 billion	$2.18	22.46

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

Institutional & Insider Ownership

78.6% of Southwest Gas Corporation shares are owned by institutional investors. Comparatively, 78.4% of UGI Corporation shares are owned by institutional investors. 1.3% of Southwest Gas Corporation shares are owned by company insiders. Comparatively, 2.2% of UGI Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Southwest Gas Corporation has a beta of 0.6, meaning that its stock price is 40% less volatile than the S&P 500. Comparatively, UGI Corporation has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500.

Profitability

This table compares Southwest Gas Corporation and UGI Corporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Southwest Gas Corporation	6.46%	9.09%	2.73%
UGI Corporation	6.48%	10.44%	3.54%

Summary

UGI Corporation beats Southwest Gas Corporation on 9 of the 16 factors compared between the two stocks.

Southwest Gas Corporation Company Profile

Southwest Gas Holdings, Inc., formerly Southwest Gas Corporation, is engaged in the business of purchasing, distributing and transporting natural gas. The Company operates through two segments: natural gas operations and construction services, which includes the operations of the Company’s subsidiary, Centuri Construction Group, Inc. (Centuri). The Company operates two pipeline transmission systems, such as a system, which includes a liquefied natural gas (LNG) storage facility owned by Paiute extending from the Idaho-Nevada border to the Reno, Sparks, and Carson City areas and communities in the Lake Tahoe area in both California and Nevada and other communities in northern and western Nevada, and a system extending from the Colorado River at the southern tip of Nevada to the Las Vegas distribution area.

UGI Corporation Company Profile

UGI Corporation is a holding company. The Company distributes, stores, transports and markets energy products and related services. It operates through six segments. The AmeriGas Propane segment consists of the propane distribution business of AmeriGas Partners, L.P. The UGI France segment consists of the French LPG distribution business of its subsidiaries, Antargaz, Finagaz and its liquefied petroleum gases (LPG) distribution businesses. The Flaga & Other segment consists of the LPG distribution businesses of Flaga GmbH, AvantiGas Limited and ChinaGas Partners, L.P. The Energy Services segment consists of energy-related businesses conducted by its subsidiary, UGI Energy Services, LLC (Energy Services). The Electric Generation segment consists of electric generation facilities conducted by Energy Services’ subsidiary. The Gas Utility segment consists of the regulated natural gas distribution businesses of its subsidiary, UGI Utilities, Inc.