Valued at a market cap of $23.3 billion, Atmos Energy Corporation (ATO) specializes in regulated natural gas distribution, pipeline, and storage services across the United States. With operations spanning eight states, it serves 3.3 million customers and manages extensive underground distribution, transmission, and storage infrastructure.
Shares of the Dallas, Texas-based company have outperformed the broader market over the past 52 weeks. ATO stock has risen 34.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 32.1%. In 2024, shares of ATO are up 29.7%, compared to SPX's 26.2% gain on a YTD basis.
Looking closer, the gas utility company has also outpaced the Utilities Select Sector SPDR Fund's (XLU) 32.2% return over the past 52 weeks. But, the stock has slightly lagged behind XLU's 30.9% YTD gain.
Atmos Energy's shares rose 1.8% following its Q4 earnings release on Nov. 6 due to a strong performance driven by higher rates in its distribution segment, which boosted operating income by $33.4 million. The company also reported a 20.2% increase in operating earnings for its pipeline and storage unit, supported by higher demand for natural gas due to hotter weather. Additionally, the 8.1% increase in the quarterly dividend to $0.87 per share and positive full-year EPS guidance ranging from $7.05 to $7.25 contributed to investor confidence.
For the current fiscal year, ending in September 2025, analysts expect ATO's EPS to grow 4.5% year-over-year to $7.14. The company's earnings surprise history is mixed. It beat the consensus estimates in three of the last four quarters while missing on another occasion. In the most recent quarter, it reported an EPS of $0.86, surpassing the consensus estimate by 2.4%.
Among the 11 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buy” ratings, one “Moderate Buy,” and five “Holds.”
This configuration is slightly more bullish than three months ago, with four “Strong Buy” ratings on the stock.
On Nov. 22, Morgan Stanley analyst David Arcaro lowered Atmos Energy's price target to $143 while maintaining an “Overweight" rating, citing underperformance of utilities relative to the S&P in October. Following the EEI Financial Conference, the firm highlighted California's heightened regulatory and political risks, along with its limited data center growth, as factors influencing its outlook.
As of writing, ATO is trading above the mean price target of $148.72. The Street-high price target of $156 implies a potential upside of just 3.8%.
