Southwest Gas (NYSE:SWX) and ONE Gas (NYSE:OGS) Head to Head Review

ONE Gas (NYSE:OGS) and Southwest Gas (NYSE:SWX) are both mid-cap utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, institutional ownership, profitability and analyst recommendations.

Profitability

This table compares ONE Gas and Southwest Gas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ONE Gas	12.47%	8.81%	3.45%
Southwest Gas	31.85%	6.79%	2.63%

Volatility & Risk

ONE Gas has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500. Comparatively, Southwest Gas has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for ONE Gas and Southwest Gas, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ONE Gas	0	6	7	0	2.54
Southwest Gas	0	1	7	0	2.88

ONE Gas presently has a consensus price target of $86.46, indicating a potential upside of 11.66%. Southwest Gas has a consensus price target of $101.25, indicating a potential upside of 9.68%. Given ONE Gas’ higher possible upside, research analysts clearly believe ONE Gas is more favorable than Southwest Gas.

Insider and Institutional Ownership

88.7% of ONE Gas shares are held by institutional investors. Comparatively, 92.8% of Southwest Gas shares are held by institutional investors. 0.9% of ONE Gas shares are held by company insiders. Comparatively, 0.6% of Southwest Gas shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

ONE Gas pays an annual dividend of $2.72 per share and has a dividend yield of 3.5%. Southwest Gas pays an annual dividend of $2.58 per share and has a dividend yield of 2.8%. ONE Gas pays out 58.6% 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. ONE Gas has raised its dividend for 2 consecutive years. ONE Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares ONE Gas and Southwest Gas”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ONE Gas	$2.43 billion	2.01	$264.22 million	$4.64	16.69
Southwest Gas	$1.94 billion	3.45	$439.83 million	$7.66	12.05

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

Summary

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

About ONE Gas

ONE Gas, Inc., together with its subsidiaries, operates as a regulated natural gas distribution company in the United States. The company provides natural gas distribution services to approximately 2.3 million customers in Oklahoma, Kansas, and Texas. It serves residential, commercial, and transportation customers. The company was founded in 1906 and is headquartered in Tulsa, Oklahoma.

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.