Based on Atmos Energy Corporation's (NYSE:ATO) earnings update on 30 June 2019, it seems that analyst expectations are fairly bearish, with earnings expected to grow by 12% in the upcoming year compared with the higher past 5-year average growth rate of 15%. By 2020, we can expect Atmos Energy’s bottom line to reach US$675m, a jump from the current trailing-twelve-month of US$602m. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is Atmos Energy going to perform in the near future?
The longer term expectations from the 8 analysts of ATO is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of ATO's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 11% based on the most recent earnings level of US$602m to the final forecast of US$843m by 2022. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $5.23 in the final year of forecast compared to the current $5.43 EPS today. With a current profit margin of 19%, this movement will result in a margin of 20% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Atmos Energy, there are three essential factors you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Atmos Energy worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Atmos Energy is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Atmos Energy? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.