For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Atmos Energy (ATO) ten years ago? It may not have been easy to hold on to ATO for all that time, but if you did, how much would your investment be worth today?
Atmos Energy's Business In-Depth
With that in mind, let's take a look at Atmos Energy's main business drivers. Founded in 1906, Atmos Energy Corporation, along with its subsidiaries, is engaged in regulated natural gas distribution and storage business. The company serves nearly 3.3 million customers in more than 1,400 communities in eight states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. The company operates more than 73,000 miles of transmission and distribution lines as well as 5,700 miles of interstate pipelines. Atmos Energy’s pipelines are connected to 37 different pipelines across eight states, thereby providing supplier diversity.
Since 2011, Atmos Energy’s operating strategy has been focused on modernizing its transmission and distribution network as well as reducing regulatory lag. This operating strategy allowed the company to increase capital expenditure by nearly 13% per annum, improve safety and reliability of its operations as well as lower methane emissions from its system.
The company manages its operation through the following reportable segments.
The distribution segment is primarily comprised of the company’s regulated natural gas distribution and related sales operations in eight states, and storage assets located in Kentucky and Tennessee. This segment contributed nearly nearly 95.9%, 96% and 95.1% to the company’s total revenues in fiscal 2023, 2022 and 2021, respectively.
Pipeline and storage segment is primarily comprised of the pipeline and storage operations of Atmos Pipeline-Texas division, and the company’s natural gas transmission operations in Louisiana. The company operates five storage facilities, having a combined storage capacity of 53 billion cubic feet. This segment contributed nearly 18.4%, 16.5% and 18.7% to the company’s total revenues in fiscal 2023, 2022 and 2021, respectively.
Intersegment Eliminations lowered revenues by 14.3%, 12.5% and 13.8% in the same time frame.
Bottom Line
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Atmos Energy, if you bought shares a decade ago, you're likely feeling really good about your investment today.
A $1000 investment made in October 2014 would be worth $2,919.27, or a gain of 191.93%, as of October 4, 2024, according to our calculations. This return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 189.65% and gold's return of 114.20% over the same time frame.
Going forward, analysts are expecting more upside for ATO. Atmos Energy continues to benefit from rising demand for natural gas, courtesy of an expanding customer base. Atmos Energy's long-term investment plan should further increase the reliability of its natural gas pipelines. Atmos Energy gains from industrial customer additions and constructive rate outcomes. Returns within a year of capital investment should further boost the company’s performance. ATO has enough liquidity to meet its near-term debt obligations. Shares of the company have outperformed the industry in the past six months. Yet, the risk of accidents in the distribution of natural gas and competition from other clean alternative fuel suppliers act as headwinds. Dependence on a single state for its revenues exposes the company to the state’s weather fluctuations and economic status. The stock has jumped 5.94% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 1 higher, for fiscal 2024; the consensus estimate has moved up as well.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
