It has been about a month since the last earnings report for Atmos Energy (ATO Quick QuoteATO - Free Report) . Shares have lost about 6.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Atmos due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Atmos Energy Q3 Earnings Beat Estimates, Revenues Miss

Atmos Energy Corporation posted third-quarter fiscal 2020 earnings of 79 cents per share, which surpassed the Zacks Consensus Estimate of 76 cents by 3.9%.

The reported earnings also improved 16.2% from the prior-year figure. The year-over-year improvement in earnings was due to positive rate outcomes in both the segments, and lower operation and maintenance expenses in the distribution segment.

Total Revenues

Total revenues of $492.9 million missed the Zacks Consensus Estimate of $621 million by 20.6%. However, the top line increased 1.5% from the year-ago figure of $485.8 million.

Segment Revenues

Distribution: Revenues from the segment decreased 2.2% to $435.3 million from $444.9 million in the prior-year quarter.

Pipeline and Storage: Revenues from the segment increased 5.9% to $158 million from $149.2 million in the year-ago quarter. The improvement was driven by an increase in rates, marginally offset by a rise in depreciation expenses.

Quarterly Highlights

Purchased gas cost in the quarter was $26.1 million, down 16.6% from the year-ago period. Operation and maintenance expenses for the quarter were $149.5 million, down 9.1% from the year-ago period.

Operating income for the reported quarter was up 13.8% year over year to $139.1 million.

The company incurred interest expenses of $19.6 million, on par with the year-ago period.

Financial Highlights

As of Jun 30, 2020, Atmos Energy had cash and cash equivalents of $208.6 million compared with $24.6 million on Sep 30, 2019.

Long-term debt was $4.53 billion as of Jun 30, 2020, up from $3.53 billion on Sep 30, 2019.

The company’s cash flow from operating activities for the first nine months of fiscal 2020 was $895.5 million, up from $808.9 million recorded in the comparable year-ago period.

It invested $1,405.7 million in the first nine months of fiscal 2020 to strengthen operations. The figure was up 17% from the year-ago period. Nearly 88% of the capital spending was related to system safety and increased reliability of its services.

Guidance

Atmos Energy reiterated its fiscal 2020 earnings guidance in the range of $4.58-$4.73 per share. The Zacks Consensus Estimate for fiscal 2020 earnings is $4.69 per share. Capital expenditure view also remains unchanged and is expected in the range of $1.85-$1.95 billion for fiscal 2020.

 

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months.

VGM Scores

Currently, Atmos has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Atmos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.