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4 Reasons to Add Atmos Energy (ATO) to Your Portfolio Now

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Atmos Energy Corporation (ATO - Free Report) , through its subsidiaries, is engaged in regulated natural gas distribution and storage businesses.

This Zacks Rank #1 (Strong Buy) stock is a promising bet at the moment, as it is focused on producing more electricity from clean sources and aims at lowering methane emissions by 50% within 2035.

Growth Projections

The Zacks Consensus Estimate for fiscal 2020 earnings is pegged at $4.72 on revenues of $3.18 billion. This implies 8.05% and 9.71% increase in the bottom and top lines, respectively, from the year-ago reported figures.

The company’s long-term (three to five years) earnings growth rate is projected at 7.2%.

Capital Expenditures

During the fiscal 2015 to 2019 period, the company invested $6.4 billion in replacing aging infrastructure and modernizing the system. The company has a long-term capital expenditure plan in the tune of $10-$11 billion over the next five years, indicating an improvement of 7-8% annually.

Courtesy of constructive regulatory outcomes, it is able to recover 90% of annual capital investments within six months and nearly 99% in no more than 12 months of investment. This in a way enables the company to fund its long-term capital plans and provides a clear visibility of earnings.

Gas Storage and Reduction of Methane Emissions

Atmos Energy is carrying out investments for the expansion of gas storage facility. The company plans to invest between $100 million and $120 million to develop a third salt-dome cavern at the Bethel storage facility. The company anticipates finishing required compliance work on all 3 caverns, which should come into service by late 2025. These storage facilities will allow Atmos Energy to meet the growing demand in the North Texas market and in turn enable it to gain from the same.

In addition, the planned capital investment will allow Atmos Energy to lower emissions. It aims at reducing methane emissions by 10-15% in the next five years from the current levels. The company also aims at lowering methane emissions by 50% within 2035.

Regular Dividend

Consistent performance of the company has enabled it to reward shareholders through steady increase in annual dividend rates. The company has raised annual dividend for 36 consecutive years. Its board of directors has declared a quarterly dividend of 57.5 cents per common share. The new dividend for fiscal 2020 is $2.30, which represents a 9.5% increase from fiscal 2019.

Price Performance

Shares of Atmos Energy have outperformed the industry in the past 12 months.



Other Stocks to Consider

Other top-ranked stocks from the utility sector include NorthWestern Corporation (NWE - Free Report) , American States Water Corporation (AWR - Free Report) and MYR Group Inc. (MYRG - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

NorthWestern Corp., American States Water and MYR Group delivered average positive surprise of 7.6%, 6.5% and 7.4% in the last four quarters, respectively.

The Zacks Consensus Estimate for 2020 earnings for NorthWestern Corp, American States Water and MYR Group has moved up 0.3%, 3.2% and 5%, respectively, in the past 60 days.

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