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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 natural gas pipelines, distribution and transportation systems and drive its performance. Given its growth opportunities, ATO is 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 1.1% to $6.65 in the past 90 days.
The Zacks Consensus Estimate for fiscal 2024 sales is pinned at $4.68 billion, implying a year-over-year increase of 9.5%.
The company’s long-term (three to five-year) earnings growth rate is 7%. It delivered an average earnings surprise of 3.3% in the last four quarters.
Debt Position
Currently, ATO’s total debt to capital is 39.34%, better than the industry’s average of 49.52%.
The time-to-interest earned ratio at the end of the second quarter of fiscal 2024 was 7.9. 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 1.36, better than the industry’s average of 0.69. 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
Atmos Energy 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 2.83%, 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 in fiscal 2023-2028 to strengthen operations. The planned investment will result in 7-8% annual earnings growth during this period.
Price Performance
In the past two years, Atmos Energy’s shares have lost 1.8% compared with the industry’s 12.6% decline.
MDU’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for MDU’s 2024 EPS implies an improvement of 3.3% from the previous year.
The Zacks Consensus Estimate for UGI’s fiscal 2024 EPS implies an increase of 2.8% from a year ago. It delivered an average earnings surprise of 19.1% in the last four quarters.
PNW’s long-term earnings growth rate is 8.2%. The Zacks Consensus Estimate for PNW’s 2024 EPS implies an improvement of 7.9% from 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 natural gas pipelines, distribution and transportation systems and drive its performance. Given its growth opportunities, ATO is 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 1.1% to $6.65 in the past 90 days.
The Zacks Consensus Estimate for fiscal 2024 sales is pinned at $4.68 billion, implying a year-over-year increase of 9.5%.
The company’s long-term (three to five-year) earnings growth rate is 7%. It delivered an average earnings surprise of 3.3% in the last four quarters.
Debt Position
Currently, ATO’s total debt to capital is 39.34%, better than the industry’s average of 49.52%.
The time-to-interest earned ratio at the end of the second quarter of fiscal 2024 was 7.9. 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 1.36, better than the industry’s average of 0.69. 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
Atmos Energy 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 2.83%, 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 in fiscal 2023-2028 to strengthen operations. The planned investment will result in 7-8% annual earnings growth during this period.
Price Performance
In the past two years, Atmos Energy’s shares have lost 1.8% compared with the industry’s 12.6% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are MDU Resources (MDU - Free Report) , UGI Corporation (UGI - Free Report) and Pinnacle West Capital Corporation (PNW - 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.
MDU’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for MDU’s 2024 EPS implies an improvement of 3.3% from the previous year.
The Zacks Consensus Estimate for UGI’s fiscal 2024 EPS implies an increase of 2.8% from a year ago. It delivered an average earnings surprise of 19.1% in the last four quarters.
PNW’s long-term earnings growth rate is 8.2%. The Zacks Consensus Estimate for PNW’s 2024 EPS implies an improvement of 7.9% from 2023.