Is Southwest Gas Holdings, Inc. overvalued or undervalued?

As of 12 June 2025, the valuation grade for Southwest Gas Holdings, Inc. has moved from expensive to very expensive, indicating a significant deterioration in its perceived value. The company is currently overvalued, with a P/E ratio of 23, which is notably higher than its peers such as New Jersey Resources Corp. at 11.29 and Chesapeake Utilities Corp. at 22.13. Additionally, the EV to EBITDA ratio stands at 10.02, further emphasizing the premium at which the stock is trading compared to its industry counterparts.
In terms of financial performance, the company shows a ROCE of 6.40% and a ROE of 6.33%, which are relatively low compared to the expectations for a company trading at such a high valuation. The PEG ratio of 1.47 also suggests that the growth prospects may not justify the current price. While the stock has outperformed the S&P 500 in the short term, with a 1-month return of 6.09% compared to the S&P 500's 3.83%, the long-term performance indicates a decline of 13.36% over three years, reinforcing the notion that the stock is overvalued in the current market environment.