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

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southwest Gas	$1.94 billion	3.30	$439.83 million	$7.66	11.55
GAIL (India)	N/A	N/A	N/A	$226.38	0.03

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.

Profitability

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

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

Insider and Institutional Ownership

92.8% of Southwest Gas shares are held by institutional investors. Comparatively, 0.4% of GAIL (India) 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, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Southwest Gas pays an annual dividend of $2.58 per share and has a dividend yield of 2.9%. GAIL (India) pays an annual dividend of $60.15 per share and has a dividend yield of 931.0%. Southwest Gas pays out 33.7% of its earnings in the form of a dividend. GAIL (India) pays out 26.6% 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.

Analyst Recommendations

This is a summary of current ratings for Southwest Gas and GAIL (India), as provided by MarketBeat.com.

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

Southwest Gas currently has a consensus target price of $100.67, suggesting a potential upside of 13.79%. Given Southwest Gas’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Southwest Gas is more favorable than GAIL (India).

Summary

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

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.

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.