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Atmos Energy (ATO)
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Atmos Energy (ATO) AI Stock Analysis

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ATO

Atmos Energy

(NYSE:ATO)

Rating:72Outperform
Price Target:
$170.00
▲(4.47% Upside)
Atmos Energy's overall stock score is primarily driven by strong financial performance and favorable earnings guidance. However, the negative free cash flow and mixed technical signals slightly offset these strengths. The company's strategic financial maneuvers bolster its position, but cautious cash flow management is crucial for future growth.
Positive Factors
Earnings
ATO reported FY24 EPS of $6.83/sh, beating Mizuho and consensus estimates and topping the high-end of guidance range.
Growth Potential
ATO's five-year capex update represented a +41% increase from the prior plan, indicating strong future growth potential.
Market Confidence
The 7.4% growth guidance for FY25 speaks to management's confidence in its asset base and anticipated benefits from the Waha spread.
Negative Factors
Financial Burden
ATO increased its financing budget by 50% to support the new capex outlook, which could cause concerns about additional financial burden.
Financial Risk
Considerable dependence on external equity could be a risk in case of a market downturn and lead to more EPS dilution.
Regulatory Risk
ATO forecasts an ~8-9% CAGR in customer bills, above historical inflation levels, which could be a risk if gas prices spike as it could crowd investment headroom and cause regulatory backlash.

Atmos Energy (ATO) vs. SPDR S&P 500 ETF (SPY)

Atmos Energy Business Overview & Revenue Model

Company DescriptionAtmos 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.
How the Company Makes MoneyAtmos Energy makes money primarily through its regulated natural gas distribution and pipeline operations. The company's revenue model is centered around the sale and delivery of natural gas to its customers, with the majority of its earnings derived from regulated utility operations. Atmos Energy charges its customers for the natural gas supply, delivery, and associated services, which are subject to state and local regulatory oversight. This regulatory framework allows the company to earn a return on its investments in infrastructure and operations, ensuring a stable revenue stream. Additionally, the company benefits from cost recovery mechanisms that enable it to recover expenses incurred in maintaining and upgrading its infrastructure. Atmos Energy's revenue is largely stable and predictable due to the regulated nature of its business, with earnings supported by a growing customer base and ongoing infrastructure investments.

Atmos Energy Earnings Call Summary

Earnings Call Date:Aug 06, 2025
(Q3-2025)
|
% Change Since: 3.63%|
Next Earnings Date:Nov 05, 2025
Earnings Call Sentiment Positive
The earnings call was largely positive, highlighting strong financial performance, substantial customer growth, and beneficial impacts from new legislation. However, there were some challenges with increased operating expenses and bad debt expense. Overall, the positives outweigh the negatives.
Q3-2025 Updates
Positive Updates
Strong Financial Performance
Year-to-date fiscal '25 net income of $1 billion, or $6.40 per diluted share, and updated EPS guidance to a range of $7.35 to $7.45.
Customer Growth
Added nearly 58,000 new residential customers in the 12 months ending June 30, 2025, with 45,000 in Texas alone. Additionally, 2,500 new commercial customers connected year-to-date.
Industrial Demand
Added 22 new industrial customers with an anticipated annual load of approximately 3.4 Bcf, equivalent to 67,000 residential customers.
Data Center Contract
APT entered into a contract to supply 30 Bcf annually to a data center in the Abilene area, with 75% of the revenue benefiting LDC customers.
Customer Satisfaction
97% satisfaction rating from customers for customer support associates and service technicians.
Recognition as Trusted Brand
Named 2025 Most Trusted Brand among 148 U.S. utility companies by Eskent, placing first in the South region.
Texas Legislation Impact
New legislation allows 80% of capital spending to qualify for Texas deferral treatment, up from 45%, which will potentially enhance future earnings.
Negative Updates
Increased Operating Expenses
Consolidated O&M increased by $85 million due to higher employee-related costs, increased line locate pipeline inspection, and higher bad debt expense.
Bad Debt Expense
A $14 million nonrecurring reduction in bad debt expense was recognized in fiscal '24, affecting year-over-year comparisons.
Company Guidance
During Atmos Energy Corporation's fiscal 2025 third-quarter earnings call, guidance was updated to reflect a revised earnings per share (EPS) range of $7.35 to $7.45. This adjustment was influenced by the adoption of new Texas legislation, which is expected to increase fourth-quarter EPS by approximately $0.10. The call highlighted significant customer growth, with nearly 58,000 new residential customers added over the past year, predominantly in Texas, and continued robust industrial demand with 22 new industrial customers added fiscal year-to-date. Additionally, Atmos Energy's capital spending increased by 22% to $2.6 billion, emphasizing safety and reliability improvements. The company maintained a strong financial position with a 60% equity capitalization and $5.5 billion in liquidity. Looking ahead, Atmos Energy anticipates a 6% to 8% annual growth in EPS, with a comprehensive update to the fiscal 2026 guidance and a five-year plan expected during the fourth-quarter earnings call in November.

Atmos Energy Financial Statement Overview

Summary
Atmos Energy exhibits strong revenue and profit growth, supported by efficient operations and a stable financial position. However, the negative free cash flow due to high capital expenditures suggests a need for improved cash generation to sustain growth.
Income Statement
85
Very Positive
Atmos Energy has shown robust revenue growth, with the most recent TTM (Trailing-Twelve-Months) revenue up 7.7% from the previous year. The company maintains a strong Gross Profit Margin of 54.4% and a healthy Net Profit Margin of 25.3%. The EBIT and EBITDA margins are also solid at 33.3% and 50.9%, respectively, indicating strong operational efficiency. Overall, the income statement reflects both growth and profitability.
Balance Sheet
78
Positive
The balance sheet shows a moderate Debt-to-Equity Ratio of 0.65, indicating a balanced approach to leveraging. The Return on Equity (ROE) is strong at 8.7%, reflecting efficient use of shareholder funds. The Equity Ratio of 48.7% demonstrates a healthy proportion of equity financing relative to total assets. The company's financial position appears stable with manageable leverage.
Cash Flow
72
Positive
Operating cash flow has grown to $1.95 billion, although free cash flow remains negative at -$1.31 billion due to significant capital expenditures. The Free Cash Flow to Net Income Ratio is not favorable, suggesting a need for improved cash generation relative to earnings. The Operating Cash Flow to Net Income Ratio is 1.71, indicating good cash generation capabilities despite the high capital expenditure outlays.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue4.49B4.17B4.28B4.20B3.41B2.82B
Gross Profit2.61B2.41B2.06B1.81B1.70B1.53B
EBITDA2.28B2.10B1.74B1.49B1.38B1.26B
Net Income1.14B1.04B885.32M774.40M665.56M601.44M
Balance Sheet
Total Assets26.98B25.19B22.52B22.19B19.61B15.36B
Cash, Cash Equivalents and Short-Term Investments543.50M307.34M15.40M51.55M116.72M20.81M
Total Debt8.51B8.13B7.12B8.37B7.56B4.77B
Total Liabilities13.84B13.04B11.65B12.77B11.70B8.57B
Stockholders Equity13.14B12.16B10.87B9.42B7.91B6.79B
Cash Flow
Free Cash Flow-1.31B-1.20B653.77M-1.47B-3.05B-897.68M
Operating Cash Flow1.95B1.73B3.46B977.58M-1.08B1.04B
Investing Cash Flow-3.23B-2.92B-2.80B-2.43B-1.96B-1.93B
Financing Cash Flow1.57B1.48B-696.77M1.39B3.14B883.78M

Atmos Energy Technical Analysis

Technical Analysis Sentiment
Positive
Last Price162.72
Price Trends
50DMA
154.64
Positive
100DMA
154.50
Positive
200DMA
148.29
Positive
Market Momentum
MACD
1.18
Negative
RSI
66.23
Neutral
STOCH
53.18
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ATO, the sentiment is Positive. The current price of 162.72 is above the 20-day moving average (MA) of 156.68, above the 50-day MA of 154.64, and above the 200-day MA of 148.29, indicating a bullish trend. The MACD of 1.18 indicates Negative momentum. The RSI at 66.23 is Neutral, neither overbought nor oversold. The STOCH value of 53.18 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ATO.

Atmos Energy Risk Analysis

Atmos Energy disclosed 23 risk factors in its most recent earnings report. Atmos Energy reported the most risks in the "Macro & Political" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Atmos Energy Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$4.67B11.3718.03%3.83%20.30%63.69%
75
Outperform
$4.42B16.188.37%4.11%-7.10%2.54%
75
Outperform
$7.76B19.068.75%4.27%-4.30%
74
Outperform
$19.91B22.4610.56%2.61%16.98%12.45%
72
Outperform
$26.37B22.699.05%2.10%10.60%8.55%
67
Neutral
$17.68B17.886.87%3.50%6.30%4.49%
65
Neutral
$5.63B29.135.41%3.16%-10.07%5.98%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ATO
Atmos Energy
164.29
38.62
30.73%
SR
Spire
76.04
15.27
25.13%
NJR
New Jersey Resources
46.96
4.50
10.60%
NI
Nisource
42.28
11.62
37.90%
SWX
Southwest Gas
78.43
9.90
14.45%
UGI
UGI
35.11
12.89
58.01%

Atmos Energy Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Atmos Energy Completes $500 Million Senior Notes Offering
Positive
Jun 26, 2025

On June 26, 2025, Atmos Energy completed a public offering of $500 million in 5.200% Senior Notes due 2035, raising approximately $493.5 million after expenses. This move strengthens Atmos Energy’s financial position, allowing flexibility in managing its debt obligations and supporting strategic initiatives, while the restrictive covenants and potential events of default outlined in the Indenture provide a structured framework for financial governance.

The most recent analyst rating on (ATO) stock is a Buy with a $159.00 price target. To see the full list of analyst forecasts on Atmos Energy stock, see the ATO Stock Forecast page.

Private Placements and Financing
Atmos Energy Announces $500M Senior Notes Offering
Neutral
Jun 26, 2025

On June 16, 2025, Atmos Energy Corporation announced an underwriting agreement for a $500 million public offering of 5.200% Senior Notes due 2035. The offering, registered under the Securities Act of 1933, is expected to close on June 26, 2025, with net proceeds of approximately $493.5 million, which will impact the company’s financial operations and potentially strengthen its market position.

The most recent analyst rating on (ATO) stock is a Buy with a $159.00 price target. To see the full list of analyst forecasts on Atmos Energy stock, see the ATO Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 10, 2025