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Atmos Energy Corp. (ATO)
NYSE:ATO
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Atmos Energy
(NYSE:ATO)
77Outperform
Positive Factors
Earnings
ATO reported FY24 EPS of $6.83/sh, beating Mizuho and consensus estimates and topping the high-end of guidance range.
Growth Potential
ATO's five-year capex update represented a +41% increase from the prior plan, indicating strong future growth potential.
Negative Factors
Financial Burden
ATO increased its financing budget by 50% to support the new capex outlook, which could cause concerns about additional financial burden.
Atmos Energy (ATO) vs. S&P 500 (SPY)
Market Cap
$23.80B
Dividend Yield2.25%
Average Volume (3M)916.85K
Price to Earnings (P/E)21.3
Beta (1Y)0.41
Revenue Growth5.90%
EPS Growth11.85%
CountryUS
Employees5,260
SectorUtilities
Sector Strength84
IndustryRegulated Utilities
Share Statistics
EPS (TTM)6.99
Shares Outstanding158,728,200
10 Day Avg. Volume978,282
30 Day Avg. Volume916,852
Financial Highlights & Ratios
PEG Ratio1.79
Price to Book (P/B)N/A
Price to Sales (P/S)5.08
Price to Cash Flow (P/CF)21.10
P/FCF Ratio21.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$152.14Price Target Upside2.34% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Atmos Energy Business Overview & Revenue Model
Company DescriptionAtmos Energy Corporation (ATO) is one of the largest fully regulated, natural gas-only distributors in the United States. Headquartered in Dallas, Texas, the company serves over three million customers across eight states. Atmos Energy operates through two primary segments: Distribution, which involves the regulated sale and distribution of natural gas to residential, commercial, public authority, and industrial customers; and Pipeline and Storage, which includes the transportation and storage of natural gas for its distribution division and third-party customers.
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 high net and gross profit margins, and a solid financial position with low leverage. However, cash flow challenges persist, particularly in generating positive free cash flow.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 | ||||
| 589.41M | 307.34M | 15.40M | 51.55M | 116.72M | 20.81M | Total Assets |
| 29.32B | 25.19B | 22.52B | 22.19B | 19.61B | 15.36B | Total Debt |
| 11.68M | 8.13B | 7.04B | 8.15B | 7.33B | 4.53B | Net Debt |
| -577.73M | 7.82B | 7.02B | 8.10B | 7.21B | 4.51B | Total Liabilities |
| 3.85B | 13.04B | 11.65B | 12.77B | 11.70B | 8.57B | Stockholders Equity |
| 25.47B | 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
148.66
Price Trends
143.51
Positive
142.68
Positive
133.43
Positive
Market Momentum
1.59
Positive
53.89
Neutral
41.52
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 148.66 is above the 20-day moving average (MA) of 148.49, above the 50-day MA of 143.51, and above the 200-day MA of 133.43, indicating a bullish trend. The MACD of 1.59 indicates Positive momentum. The RSI at 53.89 is Neutral, neither overbought nor oversold. The STOCH value of 41.52 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 (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $22.11B | 21.95 | 12.72% | 2.82% | 0.71% | 11.07% | |
77 Outperform | $23.80B | 21.25 | 9.00% | 2.25% | 5.90% | 11.85% | |
74 Outperform | $33.40B | 22.59 | 12.64% | 3.12% | -3.30% | 14.40% | |
71 Outperform | $48.17B | 22.65 | 7.91% | 4.72% | -10.79% | 18.04% | |
71 Outperform | $18.24B | 23.80 | 8.95% | 2.79% | -0.91% | 2.11% | |
65 Neutral | $11.91B | 15.60 | 6.55% | 4.41% | 7.00% | 0.55% | |
64 Neutral | $44.81B | 15.73 | 9.55% | 3.57% | -18.00% | -7.54% |
* Utilities Sector Average
Performance Comparison
ATO
Atmos Energy
148.66
35.29
31.13%
CMS
CMS Energy
72.08
15.10
26.50%
D
Dominion Energy
55.14
9.31
20.31%
NI
Nisource
38.82
13.04
50.58%
SRE
Sempra Energy
68.79
0.15
0.22%
WEC
WEC Energy Group
105.77
27.89
35.81%
Atmos Energy Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: 5.00% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
Atmos Energy reported strong customer and revenue growth, high customer satisfaction, and significant capital investments, supported by successful regulatory filings and a solid financial position. However, increased operating expenses, potential impacts from tariffs, and Moody's negative rating outlook pose challenges.Highlights
Strong Customer and Revenue Growth
Added over 59,000 new customers in the last twelve months, primarily in Texas, and achieved a first-quarter net income of $352 million, or $2.23 per diluted share.
High Customer Satisfaction
Atmos Energy ranked number one in customer satisfaction among mid-sized gas utilities in the Midwest by JD Power for the third consecutive year, with satisfaction ratings at 98%.
Significant Capital Investments
Invested $891 million in the first fiscal quarter for system modernization and growth, with plans for $3.7 billion in capital spending for fiscal 2025.
Successful Regulatory Filings
Implemented $152 million in annualized operating income increases in the distribution segment with several rate cases filed for additional income.
Solid Financial Position
Completed over $1 billion of long-term debt and equity financing, with a debt-to-equity ratio of 60% and $5.2 billion in available liquidity.
Lowlights
Increased Operating Expenses
Consolidated O&M expenses rose by $41 million, driven by increased employee-related costs and compliance and safety-related spending.
Equity Issuance and Rating Outlook
Moody's placed Atmos Energy on a negative outlook, and the company is planning significant equity issuances, which may affect financial strategies.
Supply Chain and Tariff Concerns
Potential impact from tariffs on Chinese and Mexican imports, though currently on pause, may affect O&M and CapEx costs.
Company Guidance
During the first-quarter earnings call for fiscal year 2025, Atmos Energy reported a net income of $352 million, translating to $2.23 per diluted share. The company's capital spending for the quarter reached $891 million, supporting system modernization and growth. Atmos added over 59,000 new customers, with 46,000 of them in Texas, contributing to the state's job growth of 284,000 jobs in 2024. The company connected nearly 1,100 commercial customers and 11 industrial customers, anticipating an annual usage of 2.3 billion cubic feet of gas. Atmos completed several projects enhancing system safety and reliability, including pipeline interconnects. Customer satisfaction ratings remained high at 98%, and the company helped over 16,000 customers secure $4 million in funding assistance. Atmos's fiscal 2025 first-quarter diluted earnings per share increased by 7.2% to $0.23, with operating income up by 15% to $459 million. They have implemented $152 million in annualized operating income increases in their distribution segment and completed over $1 billion in long-term debt equity financing. The company remains on track to achieve its fiscal 2025 earnings guidance range of $7.05 to $7.25 per share and plans to maintain a capital spending plan of $3.7 billion.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.