Mizuho has maintained its positive stance on Atmos Energy Corporation (NYSE: NYSE:ATO), increasing the company's price target from $138.00 to $148.00 while keeping an Outperform rating on the stock.
The firm's analysis highlighted Atmos Energy's sustained valuation premium compared to its gas utility peers, attributing this not to market volatility but to a strong investor preference for the company's standout position among Local Distribution Company (LDC) peers.
Atmos Energy's recent performance and forward-looking guidance were central to the firm's optimistic outlook. The company's robust third fiscal quarter results for 2024 and guidance towards the upper end of its fiscal year 2024 earnings per share (EPS) range have garnered attention. The market is now looking towards Atmos Energy's five-year outlook, which is set to be updated in November.
The firm anticipates that Atmos Energy will confirm its 6-8% EPS growth target, building off the higher fiscal year 2024 guidance, which has been adjusted to exclude several one-time impacts.
This projection comes despite comparisons to a challenging year that benefited from Waha-based spread advantages. Mizuho expects an EPS range for fiscal year 2025 between $7.00 and $7.20 per share, with its own estimate at $7.09 per share.
In other recent news, Atmos Energy has seen significant growth in its financial performance. The company's diluted earnings per share (EPS) rose from $5.33 to $6, a development supported by regulatory outcomes, customer expansion, and robust system revenues. Atmos Energy added 57,000 new customers, primarily in Texas, and welcomed 10 new industrial customers in the third quarter.
Additionally, the company recently appointed Michelle H. Faulk as Vice President and Controller and Telisa Toliver to its board of directors. Faulk, who has been with Atmos Energy since 2009, will assume her new role on October 1, 2024. Toliver brings extensive experience from her current role as General Manager of Renewable Power at Chevron (NYSE:CVX) Pipeline and Power.
Analysts from Edward Jones and Ladenburg Thalmann have maintained a Buy rating on Atmos Energy, citing the company's potential for above-average earnings growth and strong balance sheet. The company anticipates its fiscal '24 EPS to be at the higher end of the $6.70 to $6.80 range, projecting a 6% to 8% EPS growth through fiscal '28.
InvestingPro Insights
Atmos Energy Corporation's (NYSE:ATO) financial health and market performance continue to be a beacon for investors seeking stability within the utility sector. With a market capitalization of $21.2 billion and a robust P/E ratio of 20.1, the company's valuation reflects its solid market standing. A noticeable trend is the company's consistent dividend growth, having raised its dividend for 42 consecutive years, which is a testament to its financial resilience and commitment to shareholder returns. This aligns with Mizuho's positive outlook and the recent price target increase.
InvestingPro Tips highlight that Atmos Energy is trading near its 52-week high, which corroborates Mizuho's observation of the company's sustained valuation premium. The stock's low price volatility further supports the firm's view of Atmos Energy as a preferred choice among its Local Distribution Company peers. With analysts predicting profitability for the current year and a strong return over the last three months, the company's stock is demonstrating a performance that could justify the increased price target. Additionally, Atmos Energy's liquid assets exceed its short-term obligations, indicating a sound liquidity position.
For those interested in a deeper dive into Atmos Energy's market potential, InvestingPro offers additional insights and tips for a more comprehensive investment strategy. Currently, there are 11 more InvestingPro Tips available, which can provide investors with an edge in their decision-making process.
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