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Revenue Miss: Atmos Energy Corporation Fell 7.5% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

Simply Wall St

Investors in Atmos Energy Corporation (NYSE:ATO) had a good week, as its shares rose 2.0% to close at US$109 following the release of its annual results. Revenues came in 7.5% below expectations, at US$2.9b. Earnings per share were relatively better off, with a per-share profit of US$4.35 being roughly in line with analyst estimates. 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. We thought readers would find it interesting to see analysts' latest post-earnings forecasts for next year.

Check out our latest analysis for Atmos Energy

NYSE:ATO Past and Future Earnings, November 16th 2019

Taking into account the latest results, the latest consensus from Atmos Energy's six analysts is for revenues of US$3.51b in 2020, which would reflect a substantial 21% improvement in sales compared to the last 12 months. Earnings per share are expected to accumulate 6.6% to US$4.65. In the lead-up to this report, analysts had been modelling revenues of US$3.53b and earnings per share (EPS) of US$4.64 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

Analysts reconfirmed their price target of US$115, showing that the business is executing well and in line with expectations. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. The most optimistic Atmos Energy analyst has a price target of US$125 per share, while the most pessimistic values it at US$98.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

It can also be useful to step back and take a broader view of how analyst forecasts compare to Atmos Energy's performance in recent years. One thing stands out from these estimates, which is that analysts are forecasting Atmos Energy to grow faster in the future than it has in the past, with revenues expected to grow 21%. If achieved, this would be a much better result than the 9.4% annual decline over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 4.2% next year. Although Atmos Energy's revenues are expected to improve, it seems that analysts are also expecting it to grow faster than the wider market.

The Bottom Line

The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Atmos Energy's revenues are expected to grow faster than the wider market. The consensus price target held steady at US$115, with the latest estimates not enough to have an impact on analysts' estimated valuations.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Atmos Energy analysts - going out to 2023, and you can see them free on our platform here.

You can also view our analysis of Atmos Energy's balance sheet, and whether we think Atmos Energy is carrying too much debt, for free on our platform here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.