Atmos Energy Corporation ATO is currently gaining from huge investments made in improving the reliability of its services, new rates and customer growth. This Zacks Rank #2 (Buy) utility stock remains a potential bet for investors to take a look at.
Let’s delve deeper into the factors that make Atmos Energy a profitable pick for greater returns.
Upbeat Growth Estimates: The Zacks Consensus Estimate for fiscal 2020 earnings per share is pegged at $4.67 on $3.50 billion revenues. Both the top and the bottom line are expected to rise year over year, indicating a 20.56% and 7.36% increase, respectively from the year-ago reported figures.
The Zacks Consensus Estimate for fiscal 2021 earnings per share is pegged at $5.02 on $3.68 billion revenues. While the top line implies a 5.13% increase, the bottom line suggests a 7.62% improvement from the year-ago figures.
Atmos Energy has an expected long-term earnings (three to five years) per share growth rate of 7.15%.
Solid Stock Price Movement: Shares of Atmos Energy have rallied 20.6% in the past 12 months, outperforming the industry’s growth of 17.1%.
Northbound Earnings Estimate Revision & Surprise History: The Zacks Consensus Estimate for current-year and fiscal 2021 earnings has been revised 0.86% and 0.80% upward, respectively, over the past 90 days.
Atmos Energy’s trailing four-quarter positive earnings surprise is 3.18% on average.
Strong Investment Plans: The company has a sturdy capital expenditure policy in place, helping it enhance the safety and reliability profile of its natural gas pipeline. In the last five-year time frame, the company invested $6.4 billion in replacing aging infrastructure and modernizing the system. Its long-term capex plans project investment to the tune of $10-$11 billion over the next five years. This investment will allow Atmos Energy to strengthen its transmission and distribution pipelines and help it reduce methane emissions by 10-15% in the next five years.
Dividend Growth: The company’s steady operating performance enabled it to reward its shareholders through a consistent increase in annual dividend rates. It raised annual dividend for 36 consecutive years. The current annual dividend is $2.30 per share, representing a 9.5% rise from fiscal 2019 level.
Given the company’s robust spending strategies, addition of customers and increase in consumption, it is expected that the company will continue with the annual dividend-increase policy over the long run.
Other Stocks to Consider
Other top-ranked stocks in the utility sector include Entergy Corporation ETR, NorthWestern Corporation NWE, and Edison International EIX, all holding a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Entergy Corporation, NorthWestern Corporation, and Edison International delivered a positive earnings surprise in the last four quarters of 4.79%, 10.49% and 0.09%, respectively.
Long-term earnings per share growth for Entergy Corporation, NorthWestern Corporation and Edison International is projected at 7%, 3.53% and 5.32% respectively.
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