Earnings Report: Atmos Energy Corporation Missed Revenue Estimates By 11%

As you might know, Atmos Energy Corporation (NYSE:ATO) recently reported its first-quarter numbers. Revenues were US$876m, 11% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of US$1.47 being in line with what analysts forecast. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.

See our latest analysis for Atmos Energy

After the latest results, the eight analysts covering Atmos Energy are now predicting revenues of US$3.36b in 2020. If met, this would reflect a decent 16% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 4.6% to US$4.68. Yet prior to the latest earnings, analysts had been forecasting revenues of US$3.38b and earnings per share (EPS) of US$4.67 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$120. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Atmos Energy analyst has a price target of US$131 per share, while the most pessimistic values it at US$101. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.

Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. One thing stands out from these estimates, which is that analysts are forecasting Atmos Energy to grow faster in the future than it has in the past, with revenues expected to grow 16%. If achieved, this would be a much better result than the 7.1% annual decline over the past five years. Compare this against analyst estimates for the wider market, which suggest that (in aggregate) market revenues are expected to grow 4.4% next year. Although Atmos Energy's revenues are expected to improve, it seems that analysts are also expecting it to grow faster than the wider market.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. The consensus price target held steady at US$120, with the latest estimates not enough to have an impact on analysts' estimated valuations.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Atmos Energy analysts - going out to 2022, and you can see them free on our platform here.

You can also see whether Atmos Energy is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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