Atmos (ATO) Up 2.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Atmos Energy (ATO). Shares have added about 2.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Atmos due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Atmos Energy Q1 Earnings and Revenues Miss Estimates
Atmos Energy posted first-quarter fiscal 2024 earnings of $2.08 per share, which missed the Zacks Consensus Estimate of $2.09 by 0.47%. However, the bottom line improved by 8.9% from the year-ago quarter’s $1.91 per share.
The year-over-year increase in earnings was due to rate-case outcomes in both the Distribution and Pipeline and Storage segments and customer growth in the Distribution segment. This was partially offset by increased depreciation expenses and higher interest expenses.
Revenues
Total revenues of $1.15 billion lagged the Zacks Consensus Estimate of $1.71 billion by 32.7%. The top line also decreased 22.3% from the year-ago quarter’s reported number of $1.48 billion.
Segmental Revenues
Distribution: Revenues in the first quarter of fiscal 2024 totaled $1.1 billion, highlighting a 23.61% decline from $1.44 billion in the year-ago quarter.
Pipeline and Storage: Revenues amounted to $211 million, reflecting a 12.83% increase from $187 million in the year-ago quarter.
Highlights of the Release
Operation and maintenance expenses amounted to $166.34 million, down 10% from the year-ago quarter’s level.
Operating income totaled $399.1 million in the reported quarter, up 24.26% from the year-ago quarter’s level.
Atmos Energy incurred interest expenses of $51.87 million, up 41.1% from the year-ago quarter.
The company reported 123.21 million cubic feet of consolidated distribution throughput for the quarter, down 12.41% from the year-ago quarter’s actual.
Financial Highlights
As of Dec 31, 2023, Atmos Energy reported a strong balance sheet with available liquidity of approximately $3.2 billion.
As of Dec 31, 2023, ATO had cash and cash equivalents of $278.3 million compared with $15.4 million as of Sep 30, 2023.
Net cash flow provided by operating activities in the first quarter of fiscal 2024 was $245.28 million compared with $188.9 million in the year-ago quarter.
In the fiscal first quarter, the company invested $770 million, with nearly 82% of the amount being invested to improve the safety and reliability of its distribution and transportation systems.
The board of directors approved an 8.8% increase in the quarterly dividend rate to 80.5 cents per share.
Guidance
Atmos Energy provided fiscal 2024 earnings guidance in the range of $6.45-$6.65 per share. The Zacks Consensus Estimate is pegged at $6.57 per share, higher than $6.55, the midpoint of the guided range.
ATO expects to invest $2.9 billion in fiscal 2024.
How Have Estimates Been Moving Since Then?
Estimates review followed an upward path over the past two months.
VGM Scores
At this time, Atmos has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Atmos has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Atmos is part of the Zacks Utility - Gas Distribution industry. Over the past month, UGI (UGI), a stock from the same industry, has gained 5.2%. The company reported its results for the quarter ended December 2023 more than a month ago.
UGI reported revenues of $2.12 billion in the last reported quarter, representing a year-over-year change of -23.1%. EPS of $1.20 for the same period compares with $1.14 a year ago.
For the current quarter, UGI is expected to post earnings of $1.65 per share, indicating a change of -1.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.6% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for UGI. Also, the stock has a VGM Score of B.
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