Atmos Energy Shows Steady Growth Amid Market Performance
Atmos Energy Corporation (ATO), valued at a market cap of $23.3 billion, focuses on regulated natural gas distribution, pipeline, and storage services across the U.S. The company operates in eight states, catering to 3.3 million customers while managing a vast network of underground infrastructure.
Solid Performance Outpaces Broader Market
Over the past 52 weeks, shares of the Dallas-based company have performed well, with ATO stock climbing 34.2%. In comparison, the S&P 500 Index ($SPX) has seen a 32.1% increase during the same period. In 2024, ATO shares have gained 29.7%, also surpassing the 26.2% gain of the SPX on a year-to-date (YTD) basis.
In addition, Atmos Energy has outshined the Utilities Select Sector SPDR Fund’s (XLU) 32.2% return over the last year, though it trails slightly behind XLU’s 30.9% YTD gain.
Positive Earnings Report Bolsters Investor Confidence
Atmos Energy’s shares increased by 1.8% after the company released its Q4 earnings on November 6. This rise can be attributed to strong performance in its distribution segment, with operating income gaining $33.4 million. The pipeline and storage unit also saw a 20.2% increase in operating earnings due to an uptick in natural gas demand linked to warmer weather conditions. The company’s decision to raise its quarterly dividend by 8.1% to $0.87 per share and maintain positive full-year earnings per share (EPS) guidance between $7.05 and $7.25 further encouraged investors.
Looking ahead to the fiscal year ending September 2025, analysts project ATO’s EPS will grow 4.5% year-over-year to reach $7.14. The company’s history of earnings surprises shows mixed results: it exceeded consensus estimates in three of the last four quarters, while falling short in one instance. In its latest quarter, ATO reported an EPS of $0.86, surpassing expectations by 2.4%.
Analyst Recommendations and Price Target Adjustments
Among the 11 analysts monitoring the stock, the consensus rating is a “Moderate Buy.” This rating consists of five “Strong Buy” ratings, one “Moderate Buy,” and five “Holds.” This suggests a slightly increased optimism compared to three months prior, during which there were only four “Strong Buy” ratings.
On November 22, Morgan Stanley analyst David Arcaro adjusted Atmos Energy’s price target down to $143 while keeping an “Overweight” rating, citing utilities’ underperformance relative to the S&P in October. The firm also pointed out California’s heightened regulatory and political risks along with limited data center growth impacting their outlook.
Currently, ATO is trading above the mean price target of $148.72. The highest price target on Wall Street stands at $156, suggesting a possible upside of just 3.8%.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
