Valued at $19.5 billion by market cap, Atmos Energy Corporation (ATO) is a major player in the utilities sector, focusing on regulated natural gas distribution and storage. Based in Dallas, Texas, the company operates a vast network of pipelines and distribution systems across the United States.
Shares of the natural gas utility have lagged behind the broader market over the past 52 weeks. ATO has gained 9.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 27.7%. In 2024, shares of ATO are up 11.6%, compared to SPX's nearly 18% gain on a YTD basis.
Zooming in further, ATO is also underperforming the US Utilities iShares ETF's (IDU) 21.7% gain over the past 52 weeks and a 20.2% increase on a YTD basis.
Atmos Energy reported a strong Q3 on Aug.7, with net income rising to $165.6 million, or $1.08 per share, beating expectations. The company's distribution operating earnings increased due to higher tariffs and customer additions, while its pipeline and storage earnings rose by 40.6%, driven by higher utility rates and increased system utilization. Despite a decline in gas purchase costs, overall operating earnings benefited from regulatory approvals and strategic capital expenditures.
For the current fiscal year, ending in September, analysts expect ATO's EPS to grow 11.3% year over year to $6.79. The company's earnings surprise history is mixed. It beat the consensus estimates in three of the last four quarters while missing on one another occasion.
Among the nine analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on four “Strong Buy” ratings, one “Moderate Buy,” and four “Holds.”
On Aug. 9, Wells Fargo increased its price target on Atmos Energy to $145 - Street-high price target, citing strong Q3 results and confidence in the company's 2024 guidance while maintaining an “Overweight” rating due to solid execution and a strong balance sheet. This implies a modest potential upside of 12.1% from the current price levels.
The mean price target of $133.28 represents a premium of just 3.1% to ATO's current levels.
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.
