Head to Head Comparison: Southwest Gas (SWX) & ONEOK (OKE)

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

Institutional and Insider Ownership

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80.1% of Southwest Gas shares are held by institutional investors. Comparatively, 68.5% of ONEOK shares are held by institutional investors. 1.0% of Southwest Gas shares are held by company insiders. Comparatively, 0.5% of ONEOK shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southwest Gas 0 4 1 0 2.20
ONEOK 0 7 9 0 2.56

Southwest Gas currently has a consensus price target of $76.00, indicating a potential upside of 6.92%. ONEOK has a consensus price target of $60.93, indicating a potential upside of 1.94%. Given Southwest Gas’ higher probable upside, research analysts clearly believe Southwest Gas is more favorable than ONEOK.

Profitability

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

Net Margins Return on Equity Return on Assets
Southwest Gas 7.61% 10.00% 2.98%
ONEOK 3.19% 10.46% 3.19%

Dividends

Southwest Gas pays an annual dividend of $1.98 per share and has a dividend yield of 2.8%. ONEOK pays an annual dividend of $3.08 per share and has a dividend yield of 5.2%. Southwest Gas pays out 54.7% of its earnings in the form of a dividend. ONEOK pays out 175.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Southwest Gas has increased its dividend for 6 consecutive years and ONEOK has increased its dividend for 15 consecutive years. ONEOK is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Southwest Gas has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500. Comparatively, ONEOK has a beta of 1.21, indicating that its share price is 21% more volatile than the S&P 500.

Earnings and Valuation

This table compares Southwest Gas and ONEOK’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Southwest Gas $2.55 billion 1.34 $193.84 million $3.62 19.64
ONEOK $12.17 billion 2.02 $387.84 million $1.76 33.97

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

Summary

ONEOK beats Southwest Gas on 11 of the 17 factors compared between the two stocks.

About Southwest Gas

Southwest Gas Holdings, Inc., through its subsidiaries, purchases, distributes, and transports natural gas in Arizona, Nevada, and California. The company operates through Natural Gas Operations and Construction Services segments. As of December 31, 2017, it had 2,015,000 residential, commercial, industrial, and other natural gas customers. The company installs, replaces, repairs, and maintains energy distribution systems from the town border station to the end-user; and develops industrial construction solutions. The company also serves customers in the provinces of British Columbia and Ontario in Canada. Southwest Gas Holdings, Inc. was founded in 1931 and is headquartered in Las Vegas, Nevada.

About ONEOK

ONEOK, Inc., through its general partner interests in ONEOK Partners, L.P., engages in the gathering, processing, storage, and transportation of natural gas in the United States. The company operates through Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines segments. It owns natural gas gathering pipelines and processing plants in the Mid-Continent and Rocky Mountain regions. The company also gathers, treats, fractionates, and transports natural gas liquids (NGL), as well as stores, markets, and distributes NGL products. It owns NGL gathering and distribution pipelines in Oklahoma, Kansas, Texas, New Mexico, Montana, North Dakota, Wyoming, and Colorado; terminal and storage facilities in Missouri, Nebraska, Iowa, and Illinois; and NGL distribution and refined petroleum products pipelines in Kansas, Missouri, Nebraska, Iowa, Illinois, and Indiana, as well as owns and operates truck- and rail-loading, and -unloading facilities that interconnect with its NGL fractionation and pipeline assets. In addition, the company operates regulated interstate and intrastate natural gas transmission pipelines and natural gas storage facilities. Further, it owns and operates a parking garage in downtown Tulsa, Oklahoma; and leases excess office space to others. The company serves integrated and independent exploration and production companies; NGL and natural gas gathering and processing companies; crude oil and natural gas production companies; propane distributors; ethanol producers; and petrochemical, refining, and NGL marketing companies, as well as natural gas distribution companies, electric-generation facilities, industrial companies, municipalities, and marketing companies. ONEOK, Inc. was founded in 1906 and is headquartered in Tulsa, Oklahoma.

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