Atmos Energy CorporationATO

Morningstar Rating

Stock Research and Analysis

by Mark Barnett

As the nation's largest pure natural gas distribution utility, Atmos Energy brings together a patchwork of local distribution businesses from Virginia to Texas and a lower-risk investment opportunity for dividend-seeking investors. We like this company's Read more

Bulls Say

Atmos has favorable rate mechanisms for much of its meter base. The high percentage of weather normalization and automated rate filings mean fewer formal rate cases, reducing regulatory risk.

Atmos' regulated operations are distributed across 12 states, insulating companywide profitability from individual negative regulatory outcomes.

Atmos' regulated utilities have managed to keep operating costs lower than peers', averaging $116 per customer versus a peer group average of $216 in 2009.

The company has increased its dividend consistently during the last 26 years, with 101 consecutive payouts.

Atmos' focus on its core natural gas distribution business has led to steadier cash flows and a lower business risk profile than some of its peers. Read more

Bears Say

Although Atmos is protected from weather-related fluctuations, only a small percentage of its service area's rates are decoupled from usage patterns.

Dividend-paying stocks such as Atmos are sensitive to interest rates. As interest rates go up, dividend-paying stocks often underperform the broader market.

The growth in production that management has been forecasting in the Barnett Shale in Texas should flatten as the rig count has dropped with natural gas prices, clipping pipeline throughput growth.

A lack of available credit could limit Atmos' growth expenditures and taste for acquisitions. Read more

Strategy

Atmos is focused on improving its regulatory cost-recovery mechanisms. The company will be focusing its capital expenditures in regions where its cost recovery is most efficient--namely Texas, where Read more

Management

Robert Best has been chairman, CEO, and president of Atmos since 1997 and served as the chairman of the American Gas Association in 2004. Best has exercised his powerful influence by engaging in seven acquisitions since inheriting the Atmos throne. Read more

Profile

Atmos Energy is the largest natural gas-only distributor in the United States, serving more than 3.1 million utility customers. Its utility operations serve Colorado, Georgia, Read more

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