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Reasons to Add Atmos Energy (ATO) to Your Portfolio Right Now
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Atmos Energy Corporation’s (ATO - Free Report) systematic capital expenditure plans help increase the safety and reliability of its natural gas pipelines, distribution and transportation systems. Solid contribution from residential customers and positive regulatory outcomes will continue to drive ATO’s bottom line. Given its strong dividend history and growth opportunities, the company makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment.
Growth Projections & Earnings Growth
The Zacks Consensus Estimate for fiscal 2023 earnings per share (EPS) has increased 0.5% to $6.03 in the past 60 days.
The company’s long-term (three- to five-year) earnings growth is 7.5%. It delivered an average earnings surprise of 4.9% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, Atmos Energy’s ROE is 8.6%, higher than the sector’s average of 5.8%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.
Dividend History
Atmos Energy has been increasing its annual dividend for 39 consecutive years. It has raised its dividend five times on a year-over-year basis (over the last five years), for an average annual increase of 9.10%. The company’s current quarterly dividend is 74 cents per share. The new dividend for fiscal 2023 is $2.96 per share, indicating an 8.8% increase from the previous year’s level. ATO aims for a 6-8% increase in the annual dividend through fiscal 2026, subject to the approval of its board of directors. Its current dividend yield is 2.6%, better than the Zacks S&P 500 Composite’s 1.46%.
Systematic Investments
The company’s long-term capital expenditure plan will further strengthen its infrastructure and operations. The planned investment is also expected to result in 6-8% growth in annual earnings during 2023-2027.
Atmos Energy invested $2.45 billion in fiscal 2022 and plans to invest $2.7 billion in fiscal 2023. Capital spending amounted to $1.4 billion in fiscal second-quarter 2023, 86% of which was allocated to safety and reliability. Courtesy of constructive regulatory mechanism, more than 90% of ATO’s annual capital investments start earning returns within six months and nearly 99% within 12 months.
Price Performance
In the past three months, Atmos Energy’s shares have risen 3.8% against the industry’s average 4.3% decline.
Image: Bigstock
Reasons to Add Atmos Energy (ATO) to Your Portfolio Right Now
Atmos Energy Corporation’s (ATO - Free Report) systematic capital expenditure plans help increase the safety and reliability of its natural gas pipelines, distribution and transportation systems. Solid contribution from residential customers and positive regulatory outcomes will continue to drive ATO’s bottom line. Given its strong dividend history and growth opportunities, the company makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment.
Growth Projections & Earnings Growth
The Zacks Consensus Estimate for fiscal 2023 earnings per share (EPS) has increased 0.5% to $6.03 in the past 60 days.
The company’s long-term (three- to five-year) earnings growth is 7.5%. It delivered an average earnings surprise of 4.9% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, Atmos Energy’s ROE is 8.6%, higher than the sector’s average of 5.8%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.
Dividend History
Atmos Energy has been increasing its annual dividend for 39 consecutive years. It has raised its dividend five times on a year-over-year basis (over the last five years), for an average annual increase of 9.10%. The company’s current quarterly dividend is 74 cents per share. The new dividend for fiscal 2023 is $2.96 per share, indicating an 8.8% increase from the previous year’s level. ATO aims for a 6-8% increase in the annual dividend through fiscal 2026, subject to the approval of its board of directors. Its current dividend yield is 2.6%, better than the Zacks S&P 500 Composite’s 1.46%.
Systematic Investments
The company’s long-term capital expenditure plan will further strengthen its infrastructure and operations. The planned investment is also expected to result in 6-8% growth in annual earnings during 2023-2027.
Atmos Energy invested $2.45 billion in fiscal 2022 and plans to invest $2.7 billion in fiscal 2023. Capital spending amounted to $1.4 billion in fiscal second-quarter 2023, 86% of which was allocated to safety and reliability. Courtesy of constructive regulatory mechanism, more than 90% of ATO’s annual capital investments start earning returns within six months and nearly 99% within 12 months.
Price Performance
In the past three months, Atmos Energy’s shares have risen 3.8% against the industry’s average 4.3% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are Northwest Natural Holding Company (NWN - Free Report) , Spire Inc. (SR - Free Report) and NiSource Inc. (NI - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NWN’s long-term earnings growth is 3.7%. The Zacks Consensus Estimate for 2023 EPS indicates a year-over-year increase of 6.3%.
SR’s long-term earnings growth is 4.22%. The Zacks Consensus Estimate for 2023 EPS indicates year-over-year improvement of 10.6%.
NI’s long-term earnings growth is 7%. The Zacks Consensus Estimate for 2023 EPS implies year-over-year growth of 8.8%.