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It's been a good week for Atmos Energy Corporation (NYSE:ATO) shareholders, because the company has just released its latest annual results, and the shares gained 9.1% to US$102. Results look mixed - while revenue fell marginally short of analyst estimates at US$2.8b, statutory earnings beat expectations 3.7%, with Atmos Energy reporting profits of US$4.89 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Atmos Energy from six analysts is for revenues of US$3.42b in 2021 which, if met, would be a sizeable 21% increase on its sales over the past 12 months. Per-share earnings are expected to increase 2.1% to US$5.00. In the lead-up to this report, the analysts had been modelling revenues of US$3.48b and earnings per share (EPS) of US$5.00 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$106, suggesting that the company has met expectations in its recent result. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Atmos Energy analyst has a price target of US$116 per share, while the most pessimistic values it at US$94.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Atmos Energy's rate of growth is expected to accelerate meaningfully, with the forecast 21% revenue growth noticeably faster than its historical growth of 0.06%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.5% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Atmos Energy to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Atmos Energy going out to 2024, and you can see them free on our platform here.
Plus, you should also learn about the 2 warning signs we've spotted with Atmos Energy .
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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