Will Mixed Analyst Views Amid Rising EPS and Dividends Change Atmos Energy's (ATO) Narrative?

• Morgan Stanley recently downgraded Atmos Energy to an Equal-Weight rating even as the company posted strong fiscal 2025 earnings per diluted share of US$7.46 and extended its decades-long streak of dividend increases.
• Atmos also outlined higher capital spending and constructive 2026 earnings guidance, underscoring how regulatory support and infrastructure investment are shaping its long-term profile despite mixed analyst sentiment.
• We’ll now examine how Atmos’s robust EPS growth and higher dividend, alongside mixed analyst views, influence its existing investment narrative.

Find companies with promising cash flow potential yet trading below their fair value.

Atmos Energy Investment Narrative Recap

To own Atmos Energy, you need to believe in a long-term, regulated natural gas utility that can keep growing its rate base and earnings through heavy infrastructure spending, supported by constructive regulators. Morgan Stanley’s downgrade, focused on valuation, does not materially change the near term catalyst of capital investment translating into earnings growth, but it does spotlight the biggest current risk: high and rising capex that leans on external funding and could pressure returns if conditions shift.

The most relevant development here is Atmos’s plan to lift capital expenditures to about US$4.2 billion for infrastructure upgrades in fiscal 2026, on top of US$3.6 billion invested in 2025. That spending sits at the heart of the investment case, supporting rate base growth and dividend increases, yet it also amplifies financing and regulatory risks if costs become harder to recover or capital markets turn less accommodating.

Yet behind the dividend growth and solid EPS track record, investors should be aware of the growing dependence on favorable regulatory decisions and...

Read the full narrative on Atmos Energy (it's free!)

Atmos Energy's narrative projects $6.3 billion revenue and $1.6 billion earnings by 2028. This requires 11.1% yearly revenue growth and about a $0.4 billion earnings increase from $1.2 billion today.

Uncover how Atmos Energy's forecasts yield a $175.27 fair value, a 4% upside to its current price.

Exploring Other Perspectives

Three Simply Wall St Community fair value estimates for Atmos Energy range from about US$121.96 to US$175.27, underscoring how far apart individual views can be. When you set those against Atmos’s heavy, multi year capex plans and the reliance on constructive regulators to recover those costs, it becomes clear why many readers might want to compare several perspectives before forming a view on the company’s long term earnings power.

Explore 3 other fair value estimates on Atmos Energy - why the stock might be worth as much as $175.27!

Build Your Own Atmos Energy Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Atmos Energy research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Atmos Energy research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Atmos Energy's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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