Atmos Energy Corp (ATO) stock analysis

P/E above its 5-year median

Atmos Energy's P/E of 21.0 is above its own 5-year median of 20.6.

P/E above the industry

Atmos Energy's P/E of 21.0 is above the Gas Production and Distribution median of 17.4.

EV/EBITDA above its 5-year median

Atmos Energy's EV/EBITDA of 15.2 is above its 5-year median of 15.1.

P/B below the industry

Atmos Energy's price-to-book of 1.95 is below the Gas Production and Distribution median of 2.13.

Trading above fair value

The share price of $176.30 is above our fair value estimate of $155.62.

Margin of safety under 20%

The price is 13.3% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 3.8% a year over the last three fiscal years, short of the 10% we look for.

EPS growing 10%+ a year

Diluted EPS grew 10.0% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 21.1% over the last twelve months, against a 5-year average of 14.8% a year.

Growing slower than the industry

Revenue grew 6.5% over the last twelve months; the Gas Production and Distribution median is 13.6%.

Guidance raised

Atmos Energy raised its Fiscal 2026 earnings per diluted share outlook on May 6, 2026.

Gross margin trend

This company does not report gross profit.

Return on equity under 15%

Return on equity was 9.8% over the last twelve months and averaged 9.0% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 6.2%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

Atmos Energy's return on equity of 9.8% is below the Gas Production and Distribution median of 12.1%.

Earnings grew over 5 years

Net income grew 14.8% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 28.5% over the last twelve months, against a 5-year average of 21.8%.

Net margin above the industry

Atmos Energy's net margin of 28.5% is above the Gas Production and Distribution median of 13.1%.

High debt

Debt is 67.2% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 66.7% five years ago to 67.2%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 19.7% of total debt; we look for at least 20%.

Interest well covered

Operating income covers interest expense 12.8 times.

Short-term assets don't cover short-term debts

Current assets are 0.81 times current liabilities.

Elevated bankruptcy risk

The Altman Z-score is 1.68; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Atmos Energy paid dividends worth 2.3% of the share price over the last twelve months.

Yield below Treasuries

The 2.3% yield is below the 4.7% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Atmos Energy yields 2.3%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 45.1% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.