Reasons to Add Atmos Energy Stock to Your Portfolio Right Now

Atmos Energy Corporation ATO is set to benefit from rising demand for natural gas, courtesy of an expanding customer base. Atmos Energy's planned investments should further increase the reliability of its natural gas pipelines and boost its performance. 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 0.4% to $7.21 in the past 60 days.

The Zacks Consensus Estimate for fiscal 2025 sales is pinned at $4.78 billion, implying a year-over-year increase of 14.8%.

The company’s long-term (three-to-five-year) earnings growth rate is 7.19%. It delivered an average earnings surprise of 2.6% in the trailing four quarters.

ATO’s Dividend History

ATO has been increasing shareholder value via regular dividend payments. Currently, its 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 approval by the board of directors. Its current dividend yield is 2.22%, better than the Zacks S&P 500 Composite’s 1.57%.

Debt Position of ATO

Currently, ATO’s total debt to capital is 39.3%, better than the industry’s average of 50.49%.

The time-to-interest earned ratio at the end of the fiscal second quarter of 2025 was 8.5. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

ATO’s Benefits From Systematic Investments

Atmos Energy has a sturdy capital expenditure plan, helping the company increase the safety and reliability of its natural gas pipelines. A major portion of its planned capital expenditure is utilized to improve the safety and reliability of distribution and transportation systems.

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 Stock Price Performance

In the past six months, Atmos Energy’s shares have risen 3.4% against the industry’s 8.2% decline.   

Other Stocks to Consider

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

SWX’s long-term earnings growth rate is 9.5%. The Zacks Consensus Estimate for 2025 EPS is pinned at $3.74, which indicates year-over-year growth of 18.4%.  

The Zacks Consensus Estimate for NJR’s fiscal 2025 EPS indicates year-over-year growth of 8.9%. The Zacks Consensus Estimate for NJR’s fiscal 2025 sales indicates an increase of 4.1% from the previous year’s registered figure.  

UGI’s long-term earnings growth rate is 5.2%. The company delivered an average earnings surprise of 75.7% in the last four quarters.

 

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This article originally published on Zacks Investment Research (zacks.com).

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