Atmos Energy (ATO) Posts Solid Growth and Reaffirms Guidance

Atmos Energy (ATO) reported a 14.5% increase in net income to $1.2 billion for the year-to-date fiscal 2026, with diluted earnings per share reaching $7.33, according to the company's Q3 2026 earnings call on August 6. Management maintained full-year earnings guidance of $8.40 to $8.50 per share. The growth was driven by the addition of nearly 51,000 new customers in the past year, with almost 39,000 of them in Texas.

Additionally, the company gained 12 new industrial customers, expected to consume roughly 950,000 Mcf annually once fully operational, equivalent to adding 18,000 residential customers. Texas' economic growth is a significant factor, with 30 Fortune 500 companies added in 2026 bringing the total to 57, the highest level since 2010.

Atmospheric Pipeline Texas is undertaking multiple projects, including 29 miles of 36-inch pipeline, a new compressor station in Carthage, and completing the final 15-mile phase of a 92-mile pipeline loop, all set to be operational by the end of the year. Regulatory benefits include a potential $160 million to $165 million in Rider REV revenue credits for the period from November 1, 2026, to October 31, 2027, which, if approved, would bring cumulative customer savings under that mechanism to over $300 million since November 2023.

The company's balance sheet shows 60% equity capitalization, no short-term debt, and $4.6 billion in available liquidity. However, some challenges include unusually high spreads on APT's through-system gas transport business, now narrowing, and a $132 million deferral impact from Texas House Bill 4384. Operating costs are projected to be $875 million to $885 million for fiscal 2026, above the previous trajectory.

Despite a recent pullback in hedge fund ownership (from 37 funds to 33) and a short interest of 2.28% of float, the stock trades at a forward P/E of 18.76, assuming steady growth.