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Reasons to Add Atmos Energy (ATO) to Your Portfolio Now
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Atmos Energy Corporation’s (ATO - Free Report) strategic investment plans should further increase the safety and reliability of its natural gas pipelines and distribution and transportation systems. These should also drive the company’s performance. Given its growth opportunities, ATO makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for fiscal 2024 earnings per share (EPS) has increased 2.1% to $6.79 in the past 90 days.
The Zacks Consensus Estimate for fiscal 2024 sales is pinned at $4.57 billion, implying a year-over-year increase of 6.9%.
The company’s long-term (three to five-year) earnings growth rate is 7%. It delivered an average earnings surprise of 4.8% in the trailing four quarters.
Debt Position
Currently, ATO’s total debt to capital is 39.26%, better than the industry’s average of 49.59%.
The time-to-interest earned ratio at the end of the third quarter of fiscal 2024 was 7.7. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Liquidity
Atmos Energy’s current ratio is 1.74, better than the industry’s average of 0.57. A current ratio greater than one indicates that the company has enough short-term assets to liquidate to cover all short-term liabilities (if necessary).
Dividend History
ATO has been increasing its annual dividend for 40 consecutive years. Currently, its quarterly dividend is 80.5 cents per share. The dividend for fiscal 2024 is $3.22 per share, indicating an 8.8% increase from the prior-year level.
The company aims to increase its dividend by 6-8% per year through fiscal 2026, subject to the approval of the board of directors. Atmos Energy’s current dividend yield is 2.49%, better than the Zacks S&P 500 composite’s 1.27%.
Systematic Investments
Atmos Energy has a sturdy capital expenditure plan, which helps it increase the safety and reliability of its natural gas pipelines. A major portion of its planned capital expenditure is utilized to improve the safety and reliability of its distribution and transportation systems.
The company expects $3.1 billion in capital expenditures during fiscal 2024. It also plans to invest $17 billion during fiscal 2023-2028 to strengthen its operations. The planned investment should result in 7-8% annual earnings growth during the aforementioned period.
Price Performance
In the past three months, Atmos Energy’s shares have risen 9.2% compared with the industry’s 2.7% growth.
The Zacks Consensus Estimate for NFG’s fiscal 2024 EPS indicates a year-over-year decline of 0.8%. The company delivered an average earnings surprise of 9.8% in the trailing four quarters.
The Zacks Consensus Estimate for UGI’s fiscal 2024 EPS indicates a year-over-year increase of 2.8%. The company delivered an average earnings surprise of 99.1% in the trailing four quarters.
The Zacks Consensus Estimate for NJR’s fiscal 2024 EPS implies year-over-year growth of 10.1%. The consensus mark for fiscal 2024 sales indicates a decline of 7.7% from the top line reported in fiscal 2023.
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Reasons to Add Atmos Energy (ATO) to Your Portfolio Now
Atmos Energy Corporation’s (ATO - Free Report) strategic investment plans should further increase the safety and reliability of its natural gas pipelines and distribution and transportation systems. These should also drive the company’s performance. Given its growth opportunities, ATO makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for fiscal 2024 earnings per share (EPS) has increased 2.1% to $6.79 in the past 90 days.
The Zacks Consensus Estimate for fiscal 2024 sales is pinned at $4.57 billion, implying a year-over-year increase of 6.9%.
The company’s long-term (three to five-year) earnings growth rate is 7%. It delivered an average earnings surprise of 4.8% in the trailing four quarters.
Debt Position
Currently, ATO’s total debt to capital is 39.26%, better than the industry’s average of 49.59%.
The time-to-interest earned ratio at the end of the third quarter of fiscal 2024 was 7.7. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Liquidity
Atmos Energy’s current ratio is 1.74, better than the industry’s average of 0.57. A current ratio greater than one indicates that the company has enough short-term assets to liquidate to cover all short-term liabilities (if necessary).
Dividend History
ATO has been increasing its annual dividend for 40 consecutive years. Currently, its quarterly dividend is 80.5 cents per share. The dividend for fiscal 2024 is $3.22 per share, indicating an 8.8% increase from the prior-year level.
The company aims to increase its dividend by 6-8% per year through fiscal 2026, subject to the approval of the board of directors. Atmos Energy’s current dividend yield is 2.49%, better than the Zacks S&P 500 composite’s 1.27%.
Systematic Investments
Atmos Energy has a sturdy capital expenditure plan, which helps it increase the safety and reliability of its natural gas pipelines. A major portion of its planned capital expenditure is utilized to improve the safety and reliability of its distribution and transportation systems.
The company expects $3.1 billion in capital expenditures during fiscal 2024. It also plans to invest $17 billion during fiscal 2023-2028 to strengthen its operations. The planned investment should result in 7-8% annual earnings growth during the aforementioned period.
Price Performance
In the past three months, Atmos Energy’s shares have risen 9.2% compared with the industry’s 2.7% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are National Fuel Gas Company (NFG - Free Report) , UGI Corporation (UGI - Free Report) and New Jersey Resources (NJR - Free Report) , each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for NFG’s fiscal 2024 EPS indicates a year-over-year decline of 0.8%. The company delivered an average earnings surprise of 9.8% in the trailing four quarters.
The Zacks Consensus Estimate for UGI’s fiscal 2024 EPS indicates a year-over-year increase of 2.8%. The company delivered an average earnings surprise of 99.1% in the trailing four quarters.
The Zacks Consensus Estimate for NJR’s fiscal 2024 EPS implies year-over-year growth of 10.1%. The consensus mark for fiscal 2024 sales indicates a decline of 7.7% from the top line reported in fiscal 2023.