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Atmos Energy (ATO) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

Atmos Energy Corporation ATO is set to report third-quarter fiscal 2020 results on Aug 5, after the market closes. This natural gas distribution company delivered an earnings surprise of 0.5% in the last reported quarter.

Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Factors at Play

The unprecedented economic crisis due to the novel coronavirus outbreak is expected to have lowered distribution revenues from the non-residential customer group, which historically accounts for 41% of revenues. However, extended stay-at-home directives are expected to have increased demand from the residential group, which accounts for 59% of revenues. This is likely to have offset the decline from the non-residential group.  

New rates amounting to $58.2 million implemented in Atmos Energy’s service territories are likely to have positively impacted fiscal third-quarter earnings. The company decided to temporarily suspend natural gas disconnections for customers in financial distress due to the novel coronavirus outbreak. This may have had a minor impact on fiscal third-quarter earnings.

Expectation

The Zacks Consensus Estimate for earnings per share for third-quarter fiscal 2020 is currently pegged at 77 cents, which indicates growth of 13.2% from the year-ago reported figure.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Atmos Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Atmos Energy Corporation Price and EPS Surprise

Atmos Energy Corporation Price and EPS Surprise
Atmos Energy Corporation Price and EPS Surprise

Atmos Energy Corporation price-eps-surprise | Atmos Energy Corporation Quote

Earnings ESP: The company’s Earnings ESP is -2.28%.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Atmos Energy currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

Investors can consider the following players from the same sector that have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Essential Utilities WTRG is scheduled to release second-quarter 2020 results on Aug 5. It has an Earnings ESP of +7.74% and a Zacks Rank #2.

Southwest Gas Holdings SWX is scheduled to release second-quarter 2020 results on Aug 6. It has an Earnings ESP of +41.77% and a Zacks Rank #3.

CenterPoint Energy CNP is scheduled to release second-quarter 2020 results on Aug 6. It has an Earnings ESP of +7.87% and a Zacks Rank #3.

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CenterPoint Energy, Inc. (CNP) : Free Stock Analysis Report
 
Southwest Gas Corporation (SWX) : Free Stock Analysis Report
 
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
 
Essential Utilities Inc. (WTRG) : Free Stock Analysis Report
 
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