NYSE:SWX
$30.33
(3/18 1:14PM)
0.0%
| Open | $30.42 |
Mkt Cap | $1.4 Billion |
| High | $30.52 |
52Wk High | $30.59 |
| Low | $30.31 |
52Wk Low | $18.96 |
| Volume | 53,411 |
Avg Vol 10D | 150,200 |
Ockham's Rating/Recommendation Summary
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SWX Revenue
As a value investing shop, we are interested in seeing how SWX's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 0.76x and the low end of the range at 0.52x.
With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for SWX of 0.70x is somewhat above its historical average. As such, the current Price to Sales ratio suggests a neutral share price forecast. In order for us to become more positive about SWX we would need to see a drop in the Price to Sales ratio of 9% given current sales per share levels in order to return to its historical weighted average.
SWX Cash Earnings
As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of SWX, Ockham views their current Cash Earnings as below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for SWX, the current level of Cash Earnings compared to its historical levels helps identify where SWX is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 5.96 and a historical low Cash Earnings per share ratio of 4.10, an investor can relate where value becomes optimal.
So what does a Cash Earnings ratio below the historical norm mean for SWX? Generally, SWX's investors have paid slightly higher stock prices for this level of Cash Earnings, which bodes well as a return to historical norms is statistically likely. However, it is never a guarantee that history gives us proper direction, particularly in fluctuating market cycles. So by utilizing a long term view and incorporating other areas of analysis (like Sales, Dividends, and management analysis), each investor can gain a more complete view of SWX. Remember, that the average Cash Earnings level for SWX has been 5.03, so the current Cash Earnings level of 4.80 is a positive in our view, but by no means is it overwhelming.
SWX Dividends
A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations.
Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from SWX against the historic high and low levels over an available data range. Because SWX has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In SWX’s case, the estimated annual dividend is $1.00 producing a current dividend yield of 3.39%. The highest dividend yield from SWX in recent history was 5.51% while the lowest dividend yield was 2.08%. SWX is not making us feel all that confident when their current dividend yield is below the historical median by 10.67%.
