On Monday, Mizuho Securities adjusted its outlook on Atmos Energy Corporation (NYSE: NYSE:ATO) shares, raising the price target to $138 from $133 while reiterating a Buy rating.
The revision follows Atmos Energy's recent financial performance, where the company surpassed second-quarter fiscal year 2024 earnings expectations and increased its full-year guidance.
Atmos Energy reported earnings of $2.85 per share on Wednesday after the market closed, exceeding the market estimate of $2.77 per share. This outperformance was attributed in part to a one-time property tax benefit in Texas, initially disclosed in the first quarter of fiscal 2024.
Additional factors contributing to the strong quarter included unexpected residential growth in Texas, despite rising mortgage rates, and advantageous basis benefits from the Atmos Pipeline-Texas (APT), anticipated to persist with forthcoming maintenance on Permian pipelines.
In light of these results, Atmos Energy has updated its guidance for the fiscal year 2024, now expecting earnings to be between $6.70 and $6.80 per share. This represents a $0.20 increase at the midpoint of the range.
While this improved guidance also comes with the expectation of higher operations and maintenance costs, the analyst from Mizuho views the overall update as reinforcing the investment case for Atmos Energy, describing it as a "set-it-and-forget-it" gas utility narrative.
The increased price target of $138 by Mizuho is based on the higher earnings estimates following Atmos Energy's robust quarterly performance and optimistic outlook for the remainder of the fiscal year.
The company's recent financial achievements and forward-looking guidance have been key factors in the analyst's positive assessment of Atmos Energy's stock.
InvestingPro Insights
In alignment with Mizuho Securities' positive outlook on Atmos Energy Corporation (NYSE: ATO), InvestingPro offers additional insights that may be of interest to investors considering the company's stock. With a current market cap of $17.68 billion and a P/E ratio standing at 17.46, Atmos Energy is seen trading at a high valuation relative to near-term earnings growth, reflected by a PEG ratio of 1.19. However, this valuation comes in the context of a company that has a strong track record of dividend reliability, having raised its dividend for 31 consecutive years and maintained payments for 42 years in total. This consistency is further supported by the company's financial health, where liquid assets exceed short-term obligations.
The InvestingPro Tips highlight that two analysts have revised their earnings upwards for the upcoming period, suggesting a positive sentiment surrounding the company's future performance. Additionally, Atmos Energy is characterized by low price volatility, which may appeal to investors looking for stable investment options in the utility sector.
For those who wish to delve deeper into Atmos Energy's financials and stock performance, InvestingPro offers additional tips that can provide a more comprehensive understanding of the company's investment potential. Interested readers can utilize the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to these valuable insights. There are currently 7 more InvestingPro Tips available for Atmos Energy at https://www.investing.com/pro/ATO, which could further inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.