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Atmos Energy Corp. (ATO)
NYSE:ATO
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Atmos Energy
(NYSE:ATO)
76Outperform
Positive Factors
Financial Performance
ATO reported FY24 EPS of $6.83/sh, beating Mizuho and consensus estimates and topping the high-end of guidance range.
Growth Outlook
ATO's five-year capex update represented a +41% increase from the prior plan, indicating strong future growth potential.
Regulatory Environment
The Gas Reliability Infrastructure Program in Texas allows Atmos Energy to convert a large portion of capital expenditures to earnings rapidly, supporting robust rate base growth.
Negative Factors
Cost Pressures
Areas of concern continue to be higher labor costs that could drive a higher operations and maintenance trajectory and an elevated bill inflation.
Credit Rating Concerns
There is an anticipated downgrade in Atmos Energy's credit rating due to financial trends and changes in tax status.
Financial Risk
Considerable dependence on external equity could be a risk in case of a market downturn and lead to more EPS dilution.
Atmos Energy (ATO) vs. S&P 500 (SPY)
Market Cap
$25.71B
Dividend Yield2.1%
Average Volume (3M)1.19M
Price to Earnings (P/E)23.1
Beta (1Y)0.33
Revenue Growth10.60%
EPS Growth8.55%
CountryUS
Employees5,260
SectorUtilities
Sector Strength92
IndustryRegulated Gas
Share Statistics
EPS (TTM)3.03
Shares Outstanding158,728,200
10 Day Avg. Volume1,256,551
30 Day Avg. Volume1,186,129
Financial Highlights & Ratios
PEG Ratio8.15
Price to Book (P/B)1.96
Price to Sales (P/S)0.00
P/FCF Ratio-19.71
Enterprise Value/Market Cap1.30
Enterprise Value/Revenue2.02
Enterprise Value/Gross Profit15.41
Enterprise Value/Ebitda4.02
Forecast
1Y Price Target
$166.86Price Target Upside4.38% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Atmos Energy Business Overview & Revenue Model
Company DescriptionAtmos Energy Corporation, together with its subsidiaries, engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates through two segments, Distribution, and Pipeline and Storage. The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states. This segment distributes natural gas to approximately three million residential, commercial, public authority, and industrial customers. As of September 30, 2021, it owned 71,921 miles of underground distribution and transmission mains. The Pipeline and Storage segment engages in the pipeline and storage operations. This segment transports natural gas for third parties and manages five underground storage reservoirs in Texas; and provides ancillary services to the pipeline industry, including parking arrangements, lending, and inventory sales. As of September 30, 2021, it owned 5,699 miles of gas transmission lines. Atmos Energy Corporation was founded in 1906 and is headquartered in Dallas, Texas.
How the Company Makes MoneyAtmos Energy generates revenue primarily through its regulated natural gas distribution operations. The company earns money by charging customers for the natural gas they consume, as well as for services related to its delivery, including infrastructure maintenance and improvements. Rates are set by regulatory authorities and are designed to allow the company to recover its costs and earn a reasonable return on investment. Additionally, Atmos Energy's Pipeline and Storage segment contributes to revenue by charging fees for the transportation and storage of natural gas. This segment benefits from long-term contracts with various third-party customers, providing a stable and predictable revenue stream. The company's earnings are significantly influenced by regulatory decisions, natural gas market prices, and weather conditions, which can affect consumption levels.
Atmos Energy Financial Statement Overview
Summary
Atmos Energy shows strong profitability with a robust net profit margin and operational efficiency. The balance sheet is solid with low leverage, but cash flow challenges persist with negative free cash flow affecting financial health.Income Statement
Atmos Energy demonstrates strong profitability with a net profit margin of 25.9% in the TTM. The gross profit margin is also robust at 51.7%, indicating efficient cost management. Revenue growth has been inconsistent, but recent figures show stability. EBIT and EBITDA margins are healthy, signifying operational efficiency.85
Very Positive
Balance Sheet
The balance sheet is strong with a low debt-to-equity ratio of 0.0005, reflecting low leverage and financial stability. The equity ratio of 86.8% indicates a solid equity base. Return on equity is impressive at 4.3%, showcasing effective utilization of shareholder funds.78
Positive
Cash Flow
Free cash flow is negative, indicating potential issues in covering capital expenses with operating cash. The operating cash flow to net income ratio is strong at 1.63, showing good cash generation relative to net income. However, the free cash flow to net income ratio is negative, highlighting cash flow management challenges.70
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 4.18B | 4.17B | 4.28B | 4.20B | 3.41B | 2.82B | Gross Profit |
| 2.16B | 2.41B | 2.06B | 2.52B | 2.37B | 2.16B | EBIT |
| 1.42B | 1.36B | 1.07B | 920.98M | 905.00M | 824.10M | EBITDA |
| 2.18B | 2.10B | 1.74B | 1.49B | 1.38B | 1.26B | Net Income Common Stockholders |
| 1.08B | 1.04B | 885.32M | 774.40M | 665.56M | 601.44M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 263.77M | 307.34M | 15.40M | 51.55M | 116.72M | 20.81M | Total Assets |
| 24.00B | 25.19B | 22.52B | 22.19B | 19.61B | 15.36B | Total Debt |
| 7.54B | 8.13B | 7.04B | 8.15B | 7.33B | 4.53B | Net Debt |
| 7.27B | 7.82B | 7.02B | 8.10B | 7.21B | 4.51B | Total Liabilities |
| 12.39B | 13.04B | 11.65B | 12.77B | 11.70B | 8.57B | Stockholders Equity |
| 11.62B | 12.16B | 10.87B | 9.42B | 7.91B | 6.79B |
| Cash Flow | Free Cash Flow | ||||
| -1.29B | -1.20B | 653.77M | -1.47B | -3.05B | -897.68M | Operating Cash Flow |
| 1.77B | 1.73B | 3.46B | 977.58M | -1.08B | 1.04B | Investing Cash Flow |
| -3.05B | -2.92B | -2.80B | -2.43B | -1.96B | -1.93B | Financing Cash Flow |
| 1.58B | 1.48B | -696.77M | 1.39B | 3.14B | 883.78M |
Atmos Energy Technical Analysis
Positive
159.86
Price Trends
153.63
Positive
147.69
Positive
141.73
Positive
Market Momentum
2.49
Positive
57.72
Neutral
54.62
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ATO, the sentiment is Positive. The current price of 159.86 is above the 20-day moving average (MA) of 158.92, above the 50-day MA of 153.63, and above the 200-day MA of 141.73, indicating a bullish trend. The MACD of 2.49 indicates Positive momentum. The RSI at 57.72 is Neutral, neither overbought nor oversold. The STOCH value of 54.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ATO.
Atmos Energy Risk Analysis
Atmos Energy disclosed 23 risk factors in its most recent earnings report. Atmos Energy reported the most risks in the “Macro & Political” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Atmos Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $7.51B | 14.41 | 10.84% | 4.29% | -4.30% | ― | |
76 Outperform | $25.71B | 23.08 | 9.18% | 2.10% | 10.60% | 8.55% | |
73 Outperform | $4.52B | 18.76 | 7.30% | 4.13% | -7.10% | 2.54% | |
71 Outperform | $4.89B | 11.91 | 17.83% | 3.74% | 20.30% | 63.69% | |
71 Outperform | $18.52B | 24.29 | 10.34% | 2.75% | 13.08% | 17.47% | |
68 Neutral | $5.44B | 27.42 | 5.84% | 3.28% | -5.92% | 29.47% | |
63 Neutral | $8.49B | 10.80 | 5.35% | 4.36% | 3.56% | -11.45% |
* Utilities Sector Average
Performance Comparison
ATO
Atmos Energy
159.86
46.39
40.88%
SR
Spire
74.66
15.24
25.65%
NJR
New Jersey Resources
47.28
4.81
11.33%
NI
Nisource
39.58
11.65
41.71%
SWX
Southwest Gas
75.68
2.31
3.15%
UGI
UGI
35.00
11.71
50.28%
Atmos Energy Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q2-2025)
| % Change Since: -1.72%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Positive
The earnings call highlights Atmos Energy's strong financial performance, customer growth, and operational achievements, particularly in Texas. Despite the increased operating and maintenance expenses and bad debt, the company's positive developments and updated earnings guidance contribute to a favorable outlook.Q2-2025 Updates
Positive Updates
Strong Financial Performance
Year-to-date fiscal '25 net income of $837 million or $5.26 per diluted share, representing a 6.7% increase over the prior year period.
Customer Growth
Atmos Energy added nearly 59,000 new customers in the past 12 months, with almost 46,000 of those customers located in Texas.
Earnings Per Share Guidance Increase
Fiscal '25 earnings per share guidance updated to a range of $7.20 to $7.30.
Operational Achievements
Completion of two more interconnect projects and addition of over 1 Bcf of additional gas supplies fiscal year-to-date.
Customer Satisfaction
Customer support associates and service technicians received a 98% satisfaction rating from customers.
Negative Updates
Increased Operating and Maintenance Expenses
Consolidated O&M expense increased by $74 million, driven by employee-related costs, bad debt expense, and higher levels of line locating, pipeline inspection, and system monitoring activities.
Bad Debt Expense Increase
Bad debt expense increased by $15 million compared to the prior year.
Company Guidance
During the Atmos Energy Corporation's fiscal 2025 second quarter earnings call, several key metrics and updates were provided. The company reported a year-to-date net income of $837 million, or $5.26 per diluted share, and updated its fiscal 2025 earnings per share guidance to a range of $7.20 to $7.30. Atmos Energy added nearly 59,000 new customers over the 12 months ending March 31, 2025, with a significant portion located in Texas, where employment trends remain favorable. The company also saw solid commercial customer growth, adding approximately 850 new customers in the second quarter and nearly 2,000 year-to-date. Industrial demand remained strong, with 9 new industrial customers added in the second quarter, expected to contribute approximately 8 Bcf in annual load once operational. Atmos Energy is also progressing on several infrastructure projects, including Phase 2 of APT's Line WA Loop and the Bethel to Groesbeck project, to enhance system safety and reliability. The company achieved a 98% customer satisfaction rating, and its outreach efforts helped nearly 32,000 customers receive over $10 million in funding assistance.Atmos Energy Corporate Events
Executive/Board Changes
Atmos Energy Announces Leadership Transition and Appointment
Neutral
Dec 5, 2024
Atmos Energy Corporation has announced the retirement of Karen E. Hartsfield, who will transition to a Senior Advisor role before retiring in late 2025. Jessica Bateman Pulliam will succeed her as Senior Vice President, General Counsel, and Corporate Secretary from January 2025. Pulliam, known for her leadership and strategic advice, joins from Baker Botts L.L.P., bringing over two decades of legal expertise to Atmos Energy’s executive team.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.