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Is a Beat in Store for Atmos Energy's (ATO) Q2 Earnings?

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We expect Atmos Energy Corporation ATO to beat earnings estimates when it reports second-quarter fiscal 2019 results after the market closes on May 7. This natural gas distribution company delivered a positive earnings surprise of 3.76% in the last reported quarter.

Why a Likely Positive Surprise?

Our proven model shows that Atmos Energy is likely to beat on earnings in the to-be-reported quarter because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can see the complete list of today’s Zacks #1 Rank stocks here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of +0.35%.

Zacks Rank: Atmos Energy currently carries a Zacks Rank #3. The combination of a Zacks Rank #3 and +0.35% ESP makes us quite confident of an earnings beat in the quarter to be reported.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Factors at Play

Atmos Energy continues to enjoy the benefits of strong economic development and consequent customer volume growth in its service territories. We expect these positives to boost the company’s performance in second-quarter fiscal 2019. In addition, new gas distribution rates are expected to have a positive impact on earnings.

The Zacks Consensus Estimate for total revenues and earnings per share for second-quarter fiscal 2019 is currently pegged at $1,279 million and $1.66, respectively. The revenue and EPS estimates indicate growth of 4.9% and 5.7%, respectively, from the year-ago reported figures.

Other Stocks to Consider

In addition to Atmos Energy, investors can also consider the following players from the same sector that have the right combination of elements to post an earnings beat in the to-be-reported quarter.

PNM Resources (PNM - Free Report) is expected to release first-quarter 2019 results on May 7. It has an Earnings ESP of +3.45% and a Zacks Rank #2.

TerraForm Power, Inc. TERP is anticipated to release first-quarter 2019 results on May 7. It has an Earnings ESP of +100.00% and a Zacks Rank #2.

Pattern Energy Group Inc. PEGI is anticipated to release first-quarter 2019 results on May 10. It has an Earnings ESP of +115.20% and a Zacks Rank #3.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

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