Mizuho reiterates Southwest Gas stock rating on regulatory progress

Mizuho has upped its rating on Southwest Gas (NYSE:SWX) to "Outperform" and set a price target of $103.00, based on the company's strong third-quarter 2026 earnings report. Southwest Gas surpassed Wall Street's estimates with adjusted earnings per share of $0.20, outpacing the expected $0.14 and Mizuho's $0.12 forecast. The company's improved rates, customer growth, and reduced net interest deductions drove the positive results.

Southwest Gas currently trades at a P/E ratio of 23.4 and a PEG ratio of 0.1, indicating a reasonable valuation relative to its growth potential. The firm has maintained dividend payments for 56 consecutive years, offering a current yield of 2.79%. The California and Nevada general rate cases have been concluded, with the Arizona general rate case set to commence hearings in December, with a targeted rate implementation date of April 2027.

However, Arizona Corporation Commission election results have introduced incremental regulatory uncertainty to Southwest Gas's service territories. Management believes that the impact will be limited in Arizona, given the continuity among the three remaining commissioners. Mizuho anticipates a more comprehensive update on the fourth-quarter 2026 call, which will include refreshed long-term guidance that factors in the full $2.3 billion Great Basin expansion.

Despite the stock trading near its 52-week high, InvestingPro analysis suggests that the shares are currently overvalued compared to its Fair Value estimate. Southwest Gas Holdings reported third-quarter results that showed mixed outcomes. While adjusted earnings per share exceeded expectations at $0.20, revenue fell short of forecasts at $298.18 million compared to the projected $346.96 million.

These figures highlight the company's continued reliance on rate relief, cost management, and consistent customer growth. The earnings call provided further insights into the company's financial performance and is a standard practice for publicly traded companies to maintain transparency with investors.