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Reasons to Add Atmos Energy (ATO) to Your Portfolio Now

Atmos Energy Corporation ATO, along with its subsidiaries, is engaged in a regulated natural gas distribution and storage business. Solid contributions from residential customers, returns within a year of investment and customer additions will continue to boost the company’s performance.

Let’s focus on the factors that make the Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Growth Projections

The Zacks Consensus Estimate for fiscal 2022 and 2023 earnings per share is pegged at $5.57 and $5.96, respectively. Fiscal 2021 and 2022 estimates indicate year-over-year growth of 8.8% and 6.9%, respectively.

The Zacks Consensus Estimate for fiscal 2022 and 2023 revenues is pegged at $4.1 billion and $4.7 billion, indicating year-over-year growth of 21.6% and 12.6%, respectively.

Regular Dividend & Long-Term Earnings Growth

Currently, Atmos Energy has a dividend yield of 2.35%, higher than the Zacks S&P 500 composite’s average of 1.64%. The company’s board of directors raised the annual dividend by 8.8% in fiscal 2022 to $2.72 per share, which marks the 38th consecutive year of a dividend increase. Atmos Energy targets annual dividend growth of 6-8% and a long-term payout ratio of 50%.

The company’s long-term (three to five years) earnings growth is currently pegged at 7.5%.

Systematic Investments

Atmos Energy makes consistent investments to upgrade and maintain the existing infrastructure, as well as expand operations. The company invested nearly $2 billion in fiscal 2021 and anticipates investing $2.4-$2.5 billion in fiscal 2022.

Atmos Energy is planning to invest $13-$14 billion from fiscal 2022 through 2026, out of which 80% will be allocated to enhance the safety of existing operations. The planned investment will result in 6-8% annual earnings growth over the same time frame.

Strong Credit Rating and Ample Liquidity

Atmos Energy has been assigned top-tier credit ratings by rating agencies. The strong ratings will allow the company to get quicker approval for loans in a favorable condition. As of Jun 30, 2022, it had $3.5 billion of available liquidity, which was enough to meet the current obligations.

Price Performance

In the past year, the stock has gained 19.3% compared with the industry’s rally of 18.2%.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Other Stocks to Consider

Some other top-ranked stocks in the same industry are NewJersey Resources Corporation NJR, National Fuel Gas Company NFG and South Jersey Industries SJI. All the companies currently carry a Zacks Rank #2 (Buy).

NewJersey Resources, National Fuel Gas and South Jersey Industries pay regular dividends, thereby ensuring steady income for investors. The current dividend yields of NewJersey Resources, National Fuel Gas and South Jersey Industries  are 3.2%, 2.6% and 3.6%, respectively.

The Zacks Consensus Estimate for 2022 earnings for South Jersey Industries has moved up 0.6% in the past 60 days. In the same time frame, fiscal 2022 earnings estimates for NewJersey Resources and National Fuel Gas have moved by 4.3% and 2.1%, respectively.


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South Jersey Industries, Inc. (SJI) : Free Stock Analysis Report
 
Atmos Energy Corporation (ATO) : Free Stock Analysis Report
 
National Fuel Gas Company (NFG) : Free Stock Analysis Report
 
NewJersey Resources Corporation (NJR) : Free Stock Analysis Report
 
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