Critical Survey: GAIL (India) (OTCMKTS:GAILF) and Southwest Gas (NYSE:SWX)

GAIL (India) (OTCMKTS:GAILF) and Southwest Gas (NYSE:SWX) are both utilities companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, risk, earnings, analyst recommendations, valuation, institutional ownership and profitability.

Valuation and Earnings

This table compares GAIL (India) and Southwest Gas”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GAIL (India)	N/A	N/A	N/A	$226.38	0.03
Southwest Gas	$1.94 billion	3.31	$439.83 million	$7.66	11.56

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for GAIL (India) and Southwest Gas, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GAIL (India)	0	0	0	0	0.00
Southwest Gas	0	1	6	0	2.86

Southwest Gas has a consensus target price of $100.67, indicating a potential upside of 13.70%. Given Southwest Gas’ stronger consensus rating and higher probable upside, analysts plainly believe Southwest Gas is more favorable than GAIL (India).

Insider & Institutional Ownership

0.4% of GAIL (India) shares are held by institutional investors. Comparatively, 92.8% of Southwest Gas shares are held by institutional investors. 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 company is poised for long-term growth.

Profitability

This table compares GAIL (India) and Southwest Gas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GAIL (India)	N/A	N/A	N/A
Southwest Gas	31.85%	6.79%	2.63%

Dividends

GAIL (India) pays an annual dividend of $60.15 per share and has a dividend yield of 905.8%. Southwest Gas pays an annual dividend of $2.58 per share and has a dividend yield of 2.9%. GAIL (India) pays out 26.6% 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. GAIL (India) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Southwest Gas beats GAIL (India) on 10 of the 13 factors compared between the two stocks.

About GAIL (India)

GAIL (India) Limited operates as a natural gas processing and distribution company in India and internationally. The company operates through Transmission Services, Natural Gas Marketing, Petrochemicals, LPG and Other Liquid Hydrocarbons, and Other segments. It is involved in the transmission and marketing of natural gas to the power, fertilizer, industrial, automotive, petrochemicals, and domestic and commercial sectors. The company also markets liquefied petroleum gas (LPG), propane, pentane, naphtha, mixed fuel oil, polyethylene, and polypropylene; and manufactures petrochemicals, such as high-density polyethylene and linear low-density polyethylene under the brand names of G-Lex and G-Lene. In addition, it generates wind and solar power. Further, the company engages in the chartering of LNG vessels. The company was incorporated in 1984 and is based in New Delhi, India.

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.