It has been about a month since the last earnings report for Atmos Energy (ATO Quick QuoteATO - Free Report) . Shares have added about 1.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Atmos due for a pullback? 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 Q1 Earnings Top, Revenues Miss Estimates

Atmos Energy Corporation posted first-quarter fiscal 2021 earnings of $1.71 per share, which surpassed the Zacks Consensus Estimate of $1.58 by 8.2%.

The reported earnings also improved 16.3% from the prior-year figure. The year-over-year improvement in earnings was due to positive rate outcomes in both the segments and customer growth in its distribution segment.

Total Revenues

Total revenues of $914.5 million missed the Zacks Consensus Estimate of $1,011 million by 9.5%. However, the top line increased 4.4% from the year-ago reported figure.

Segment Revenues

Distribution: Revenues from the segment increased 5.8% to $876.7 million from $828.5 million in the prior-year quarter. The improvement was driven by an increase in rates.

Pipeline and Storage: Revenues from the segment increased 7.8% to $159.7 million from $148.2 million in the year-ago quarter.

Quarterly Highlights

Purchased gas cost for the quarter was $288.3 million, down 2.9% from the year-ago period. Operation and maintenance expenses for the quarter were $138.6 million, down 8.9% from the year-ago period.

Operating income for the reported quarter was up 18.2% year over year to $298.8 million.

The company incurred interest expenses of $22 million, down 19.4% from the year-ago period.

Financial Highlights

As of Dec 31, 2020, Atmos Energy had cash and cash equivalents of $457.8 million compared with $20.8 million on Sep 30, 2020.

Long-term debt was $5.12 billion as of Dec 31, 2020, up from $4.53 billion on Sep 30, 2020.

The company’s cash flow from operating activities for fiscal first-quarter 2021 was $157.1 million, down from $172.4 million recorded in the year-ago period.

It invested $456.8 million in fiscal first-quarter 2021 to strengthen operations. The figure was down 13.7% from the year-ago period, primarily due to timing of spending in its distribution segment. Nearly 87% of the capital spending was associated with system safety and increased reliability of services.

Guidance

Atmos Energy reiterated its fiscal 2021 earnings guidance in the range of $4.90-$5.10 per share. The Zacks Consensus Estimate for fiscal 2021 earnings is $5.03 per share. It expects capital expenditure in the range of $2-$2.2 billion for fiscal 2021.



 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Atmos has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Atmos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.