Atmos Energy Corporation Recorded A 17% Miss On Revenue: Analysts Are Revisiting Their Models
Atmos Energy Corporation (NYSE:ATO) shareholders are probably feeling a little disappointed, since its shares fell 2.8% to US$97.33 in the week after its latest quarterly results. Revenues were US$978m, 17% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of US$1.95 being in line with what the analysts forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Atmos Energy after the latest results.
Check out our latest analysis for Atmos Energy
Following the latest results, Atmos Energy's eight analysts are now forecasting revenues of US$3.09b in 2020. This would be a decent 11% improvement in sales compared to the last 12 months. Statutory per share are forecast to be US$4.67, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.22b and earnings per share (EPS) of US$4.67 in 2020. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.
The consensus has reconfirmed its price target of US$115, showing that the analysts don't expect weaker sales expectations next year to have a material impact on Atmos Energy's market value. 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. Currently, the most bullish analyst values Atmos Energy at US$132 per share, while the most bearish prices it at US$94.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. For example, we noticed that Atmos Energy's rate of growth is expected to accelerate meaningfully, with revenues forecast to grow 11%, well above its historical decline of 4.6% a year over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 5.2% next year. Not only are Atmos Energy's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at US$115, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Atmos Energy going out to 2022, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for Atmos Energy you should be aware of.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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