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1. Company Snapshot

1.a. Company Description

Atmos Energy Corporation, together with its subsidiaries, engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States.It operates through two segments, Distribution, and Pipeline and Storage.The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states.


This segment distributes natural gas to approximately three million residential, commercial, public authority, and industrial customers.As of September 30, 2021, it owned 71,921 miles of underground distribution and transmission mains.The Pipeline and Storage segment engages in the pipeline and storage operations.


This segment transports natural gas for third parties and manages five underground storage reservoirs in Texas; and provides ancillary services to the pipeline industry, including parking arrangements, lending, and inventory sales.As of September 30, 2021, it owned 5,699 miles of gas transmission lines.Atmos Energy Corporation was founded in 1906 and is headquartered in Dallas, Texas.

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1.b. Last Insights on ATO

Atmos Energy Corporation's recent performance was driven by strong Q1 2025 earnings and revenue growth. The company beat earnings estimates with $2.23 per share, outpacing the expected $2.20 per share. This success can be attributed to strategic investments and customer growth, as mentioned in the earnings release. Additionally, the company's ability to increase shareholder value and better debt management are strong indicators of its growth prospects. Furthermore, the recent share buyback activity suggests a commitment to returning value to shareholders, reducing the number of outstanding shares and increasing earnings per share.

1.c. Company Highlights

2. Atmos Energy's Fiscal '25 Earnings: A Strong Performance with Growth Ahead

Atmos Energy reported diluted earnings per share of $7.46 for fiscal '25, marking the 23rd consecutive year of earnings per share growth. The company's fiscal year results reflect the focus and dedication of the entire Atmos Energy team, with revenues driven by solid customer growth, adding approximately 57,000 residential customers, with over 44,000 of those new customers located in Texas. The actual EPS came out at $7.46, beating analysts' estimates, although the exact revenue figure wasn't disclosed, analysts estimated next year's revenue growth at 10.1%. The company's 5-year plan through fiscal 2030 focuses on safety and reliability through system modernization, being mindful of customer affordability.

Publication Date: Nov -13

📋 Highlights
  • Earnings Growth: Reported $7.46 diluted EPS, 23rd consecutive year of growth; EPS guidance for fiscal '26 set at $8.15–$8.35 with 6–8% annual growth.
  • Customer Expansion: Added 57,000 residential customers (44,000 in Texas), 3,200 commercial, and 29 industrial customers in fiscal '25.
  • Capital Investment: $26 billion 5-year plan (2026–2030), 85% allocated to safety/reliability, driving 13–15% annual rate base growth to $42 billion by 2030.
  • Regulatory Impact: Texas HB 4384 to contribute $0.40 annual EPS boost, with 60% of benefits recognized in distribution over 5 years.
  • Dividend Commitment: Plans to align dividend growth with EPS (6–8% annually) and maintain 50-50 debt-equity capital structure.

Customer Growth and Revenue Drivers

The company added nearly 3,200 commercial customers and 29 industrial customers during fiscal '25, with these industrial customers anticipated to consume approximately 4 Bcf of gas annually when fully operational. The growth in customer base and consumption is expected to drive revenue growth, with the company's 5-year plan anticipating earnings per share growth of 6% to 8% annually. As Kevin Akers mentioned, "We do have some additional fortifications to support that growth, driven by the folks moving into Texas and the demand anticipated with them coming in and the load from their use of natural gas."

Valuation and Growth Prospects

Atmos Energy's current valuation metrics indicate a P/E Ratio of 24.47, P/B Ratio of 2.12, and a Dividend Yield of 1.96%. The company's ROE stands at 9.0%, indicating a decent return on equity. With a 5-year plan to invest $26 billion, with approximately 85% allocated to safety and reliability, the company is poised for growth. The anticipated earnings per share in fiscal 2030 is expected to be in the range of $10.80 to $11.20, indicating a strong growth trajectory.

Regulatory Environment and Capital Recovery

The company is expecting a positive impact from Texas House Bill 4384, with approximately 60% of the impact recognized in the distribution segment over the 5-year plan. The annual impact of the legislation is roughly $0.40, resulting in a rebased guidance range. As Christopher Forsythe stated, "We will continue to use a combination of long-term debt and equity to preserve the strength of our balance sheet, minimize the cost of financing for our customers and reduce financing risk."

Dividend Growth and Shareholder Returns

The company plans to grow the dividend in line with earnings per share growth, with a rebased guide based on the rebased earnings per share guidance. The company intends to grow the dividend 6% to 8% over the next 5 years, providing a steady stream of income for shareholders. The current dividend yield stands at 1.96%, which, while not exceptionally high, is supported by a reasonable payout ratio and a history of consecutive dividend growth.

3. NewsRoom

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Has Atmos Energy (ATO) Outpaced Other Utilities Stocks This Year?

Dec -02

Source: zacks.com

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Here's Why ATO Stock Deserves a Spot in Your Portfolio Right Now

Dec -01

Source: zacks.com

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Best Dividend Aristocrats For December 2025

Nov -29

Source: seekingalpha.com

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Market Today: Alphabet rallies, Amazon's $50B AI push

Nov -24

Source: gurufocus.com

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Artisan Value Income Fund Q3 2025 Portfolio Activity

Nov -24

Source: seekingalpha.com

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First Look: BHP ends Anglo bid, Novo miss, Black Friday

Nov -24

Source: gurufocus.com

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Bahl & Gaynor Inc. Has $49.82 Million Holdings in Atmos Energy Corporation $ATO

Nov -22

Source: defenseworld.net

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Atmos Energy Corporation $ATO Position Increased by AGP Franklin LLC

Nov -22

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.82%)

6. Segments

Distribution

Expected Growth: 4.83%

Atmos Energy's 4.83% distribution growth is driven by its consistent operating performance, strong cash flow generation, and a solid balance sheet. The company's regulated business model provides a stable earnings base, while its ongoing capital investment program and organic growth initiatives support long-term distribution growth.

Pipeline and Storage

Expected Growth: 4.65%

Atmos Energy's Pipeline and Storage segment growth of 4.65% is driven by increasing demand for natural gas, expansion of existing infrastructure, and strategic acquisitions. Additionally, investments in pipeline modernization and safety initiatives contribute to growth. Furthermore, favorable regulatory environments and rising production from shale plays also support segment growth.

7. Detailed Products

Natural Gas Distribution

Atmos Energy Corporation provides natural gas distribution services to residential, commercial, and industrial customers.

Pipeline and Storage Services

The company offers pipeline and storage services to transport and store natural gas for its customers.

Natural Gas Marketing

Atmos Energy Corporation markets and sells natural gas to customers, including municipalities, utilities, and industrial customers.

Intrastate Pipeline Services

The company provides intrastate pipeline services, transporting natural gas within specific states.

8. Atmos Energy Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Atmos Energy Corporation is medium due to the availability of alternative energy sources such as solar and wind power. However, the high cost of switching to these alternatives and the lack of infrastructure in some areas reduce the threat.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of alternative energy providers in many areas, giving Atmos Energy Corporation a significant market share and pricing power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the presence of multiple suppliers of natural gas and other energy sources. However, the high demand for these resources and the limited number of suppliers give them some bargaining power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the energy industry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established energy companies competing for market share, leading to aggressive pricing and marketing strategies.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 38.80%
Debt Cost 3.95%
Equity Weight 61.20%
Equity Cost 7.23%
WACC 5.95%
Leverage 63.41%

11. Quality Control: Atmos Energy Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 6.1/10

Value: 4.3

Growth: 4.9

Quality: 5.4

Yield: 4.0

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Volatility: 10.0

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Quality: 2.5

Yield: 3.0

Momentum: 0.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

171.29$

Current Price

171.29$

Potential

-0.00%

Expected Cash-Flows