Atmos Energy Corporation’s ATO strategic investment plans should further increase the safety and reliability of its natural gas pipelines and distribution and transportation systems. Solid contributions from residential customers help boost the company’s top line. Given its growth opportunities, ATO makes for a solid investment option in the utility sector.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.

ATO’s Growth Projections & Surprise History

The Zacks Consensus Estimate for fiscal 2025 earnings per share (EPS) has increased 0.3% to $7.18 in the past 90 days.

The Zacks Consensus Estimate for fiscal 2025 sales is pinned at $4.92 billion, implying a year-over-year increase of 18.2%.

The company’s long-term (three-to-five-year) earnings growth rate is 7.1%. It delivered an average earnings surprise of 3.4% in the trailing four quarters.

Debt Position of ATO

Currently, ATO’s total debt to capital is 39.97%, better than the industry’s average of 50.49%.

The time-to-interest earned ratio at the end of the fiscal first quarter of 2025 was 7.8. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

ATO’s Dividend History

ATO has been increasing shareholder value via regular dividend payments. In November 2024, the company’s board declared an 8.8% increase in the annual dividend rate. Its new quarterly dividend is 87 cents per share. This resulted in an annualized dividend of $3.48 per share compared with the previous year's $3.22. The company has raised its annual dividend for 41 consecutive years and paid quarterly dividends for 165 years.

Atmos Energy aims to increase its dividend by 6-8% per year through fiscal 2026, subject to the approval of the board of directors. Its current dividend yield is 2.38%, better than the Zacks S&P 500 composite’s 1.18%.

ATO’s Systematic Investments

The company’s systematic capital expenditure plan to enhance the safety and reliability of its natural gas pipelines helps serve its expanding customer base more efficiently.  

ATO expects $3.7 billion in capital expenditures during fiscal 2025 and plans to invest $24 billion during fiscal 2025-2029 to strengthen its operations. The planned investment should result in 6-8% annual earnings growth during the same period.

ATO’s Price Performance

In the past six months, Atmos Energy’s shares have risen 13.2% compared with the industry’s 7.5% growth.   

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Other Stocks to Consider

A few other top-ranked stocks from the same sector are Southwest Gas SWX, New Jersey Resources NJR and CenterPoint Energy CNP, each presently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SWX’s long-term earnings growth rate is 6.61%. The Zacks Consensus Estimate for fourth-quarter EPS indicates an increase of 1.8% from the prior-year registered figure.  

The Zacks Consensus Estimate for NJR’s fiscal 2025 EPS indicates year-over-year growth of 7.5%. The Zacks Consensus Estimate for NJR’s fiscal 2025 sales indicates an increase of 2.5% from the previous year’s registered figure.  

CNP’s long-term earnings growth rate is 7.12%. The Zacks Consensus Estimate for 2024 EPS indicates year-over-year growth of 8%.

 

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