Is Atmos Energy’s (NYSE:ATO) Share Price Gain Of 120% Well Earned?

The most you can lose on any stock (assuming you don’t use leverage) is 100% of your money. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. Long term Atmos Energy Corporation (NYSE:ATO) shareholders would be well aware of this, since the stock is up 120% in five years. We note the stock price is up 1.3% in the last seven days.

See our latest analysis for Atmos Energy

To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).

Over half a decade, Atmos Energy managed to grow its earnings per share at 8.6% a year. This EPS growth is lower than the 17% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. And that’s hardly shocking given the track record of growth.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

NYSE:ATO Past and Future Earnings, March 18th 2019
NYSE:ATO Past and Future Earnings, March 18th 2019

It might be well worthwhile taking a look at our free report on Atmos Energy’s earnings, revenue and cash flow.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Atmos Energy the TSR over the last 5 years was 149%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It’s nice to see that Atmos Energy shareholders have received a total shareholder return of 25% over the last year. That’s including the dividend. That’s better than the annualised return of 20% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before spending more time on Atmos Energy it might be wise to click here to see if insiders have been buying or selling shares.

We will like Atmos Energy better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.