Critical Review: Atmos Energy (ATO) & Its Rivals

Atmos Energy (NYSE:ATO) is one of 46 publicly-traded companies in the “Gas Utilities” industry, but how does it compare to its peers? We will compare Atmos Energy to similar businesses based on the strength of its risk, institutional ownership, profitability, dividends, earnings, analyst recommendations and valuation.

Profitability

This table compares Atmos Energy and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Atmos Energy	28.50%	9.67%	4.67%
Atmos Energy Competitors	20.20%	7.85%	3.65%

Dividends

Atmos Energy pays an annual dividend of $4.00 per share and has a dividend yield of 2.3%. Atmos Energy pays out 47.6% of its earnings in the form of a dividend. As a group, “Gas Utilities” companies pay a dividend yield of 12.0% and pay out 17.4% of their earnings in the form of a dividend. Atmos Energy has raised its dividend for 41 consecutive years. Atmos Energy lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Valuation & Earnings

This table compares Atmos Energy and its peers revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Atmos Energy	$4.70 billion	$1.20 billion	20.54
Atmos Energy Competitors	$2.95 billion	$316.42 million	35.03

Atmos Energy has higher revenue and earnings than its peers. Atmos Energy is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Risk and Volatility

Atmos Energy has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500. Comparatively, Atmos Energy’s peers have a beta of 0.43, indicating that their average stock price is 57% less volatile than the S&P 500.

Institutional & Insider Ownership

90.2% of Atmos Energy shares are held by institutional investors. Comparatively, 52.8% of shares of all “Gas Utilities” companies are held by institutional investors. 0.4% of Atmos Energy shares are held by company insiders. Comparatively, 10.4% of shares of all “Gas Utilities” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Atmos Energy and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atmos Energy	0	10	3	0	2.23
Atmos Energy Competitors	463	1405	1186	56	2.27

Atmos Energy currently has a consensus price target of $183.27, suggesting a potential upside of 6.23%. As a group, “Gas Utilities” companies have a potential upside of 11.76%. Given Atmos Energy’s peers stronger consensus rating and higher probable upside, analysts clearly believe Atmos Energy has less favorable growth aspects than its peers.

Summary

Atmos Energy peers beat Atmos Energy on 8 of the 15 factors compared.

About Atmos Energy

Atmos 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 3.3 million residential, commercial, public authority, and industrial customers; and owned 73,689 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 facilities in Texas; provides ancillary services customary to the pipeline industry, including parking arrangements, lending, and inventory sales; and owned 5,645 miles of gas transmission lines. Atmos Energy Corporation was founded in 1906 and is headquartered in Dallas, Texas.