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5 Reasons to Add Atmos Energy (ATO) to Enhance Your Portfolio

Zacks Equity Research

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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Entergy Corporation (ETR) : Free Stock Analysis Report
 
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