ATO

Utilities

Atmos Energy

Price Chart

Market Data

Financials

XBRL · SEC EDGAR

2016–2025(10yr)

Revenue

Net Income

Free CF

Metric	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$2.5B	$2.8B	$3.1B	$2.9B	$2.8B	$3.4B	$4.2B	$4.3B	$4.2B	$4.7B	+12.9%
Gross Profit	$1.7B	—	$1.9B	$2.0B	$2.2B	$2.4B	$2.5B	$2.8B	—	—	—
Gross Margin	71.1%	—	62.5%	70.4%	76.6%	69.7%	60.0%	66.0%	—	—	—
Operating Income	$668.0M	$727.5M	$723.1M	$746.1M	$824.1M	$905.0M	$921.0M	$1.1B	$1.4B	$1.6B	+15.1%
Operating Margin	27.2%	26.4%	23.2%	25.7%	29.2%	26.6%	21.9%	25.0%	32.5%	33.2%	+0.6pp
Net Income	$350.1M	$396.4M	$603.1M	$511.4M	$601.4M	$665.6M	$774.4M	$885.9M	$1.0B	$1.2B	+14.9%
Net Margin	14.3%	14.4%	19.4%	17.6%	21.3%	19.5%	18.4%	20.7%	25.0%	25.5%	+0.5pp
Free Cash Flow	-$292.0M	-$270.0M	-$342.9M	-$724.7M	-$897.7M	-$3.1B	-$1.5B	$653.8M	-$1.2B	-$1.5B	-25.6%
FCF Margin	-11.9%	-9.8%	-11.0%	-25.0%	-31.8%	-89.6%	-34.9%	15.3%	-28.9%	-32.2%	-3.3pp
EPS (Diluted)	$3.38	$3.73	$5.43	$4.35	$4.89	$5.12	$5.60	$6.10	$6.83	$7.46	+9.2%

Total Debt$8.9B

Cash & Equiv.$202.7M

Net Debt$8.7B

4 min read

1. THE BIG PICTURE

Atmos Energy is less a traditional utility and more a specialized capital-recycling engine. By focusing exclusively on natural gas distribution and utilizing aggressive regulatory mechanisms, Atmos Energy has decoupled its earnings from the volatility of weather and the delays of traditional rate cases. This allows Atmos Energy to maintain the highest profit margins among its peers while simultaneously executing a multibillion-dollar infrastructure modernization program.

2. WHERE THE RISKS HIT HARDEST

Atmos Energy’s primary strength—its ability to recover 95% of capital expenditures within six months (10-K Item 1)—is threatened by regulatory lag. Because Atmos Energy must often place assets in service before receiving rate relief, any political or administrative slowdown in Texas, which houses 75% of its operations, would immediately strain its balance sheet.

Furthermore, the competitive advantage Atmos Energy claims in pricing natural gas below electric alternatives like Duke Energy or Dominion Energy is vulnerable to operational hazards. The inherent risks of gas leaks or explosions (10-K Item 1A) could trigger "high consequence area" repair mandates from PHMSA, leading to significant operating costs that may not be immediately recoverable through existing rate riders.

3. WHAT THE NUMBERS SAY TOGETHER

A look across the financial statements reveals a striking divergence between paper profitability and cash reality. Atmos Energy leads its peer group with a 35.0% operating margin and a 26.9% net margin (XBRL), yet it ranks last in free cash flow (FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders) margin at -30.6%. This is not a sign of operational weakness but of a deliberate, capital-intensive strategy; Atmos Energy spent $1.0 billion on capital expenditures in a single quarter alone (8-K).

The 12.9% revenue growth aligns with the broader peer group, trailing only DTE and WEC. While Atmos Energy is tracking toward its full-year EPSEPSEarnings Per Share — the company's net profit divided by its share count; the most common per-share profitability metric guidance of $8.15 to $8.35, the negative FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders highlights its total dependence on capital markets to fund its $4.2 billion annual investment cycle. Market sentiment remains stable, however, with short interest sitting at a low 2.8% of the float (Yahoo Finance), suggesting investors are comfortable with this "spend-to-grow" model.

4. IS IT WORTH IT AT THIS PRICE?

At a forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations of 20.8x, Atmos Energy trades at a 9% premium to the peer median of 19.1x (Yahoo Finance). This premium is supported by Atmos Energy’s superior net margin of 26.9%, which is more than double that of peers like CenterPoint Energy (11.3%). At this valuation, the market is pricing in approximately 3.5% long-term growth (CAPM analysis).

This growth rate appears credible given Atmos Energy’s $4.2 billion capital plan and its track record of securing "annualized regulatory outcomes," such as the $122.5 million implemented in the most recent quarter (8-K). However, the valuation is sensitive to growth expectations; if long-term growth were to slow to a GDP-pace of 2.5%, the justified multiple would fall to 17.1x, representing significant downside. The current price is only "right" if Atmos Energy continues to successfully navigate the Texas regulatory environment to maintain its rapid capital recovery.

5. WHAT WOULD CHANGE THIS VIEW?

Cautious if the recovery timeline for capital expenditures extends beyond the current 6-to-12-month window, signaling increased regulatory lag.
Cautious if Atmos Energy’s credit rating is downgraded, as its -30.6% FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin makes it highly sensitive to the cost of debt needed to fund infrastructure.
Constructive if revenue growth accelerates beyond 13% while maintaining the current 35% operating margin lead over peers.

6. BOTTOM LINE

Structural Advantage: A specialized regulatory framework including formula rate mechanisms and weather normalization that protects 97% of core revenues and ensures rapid capital recovery.

Bottom Line: Atmos Energy is a premium-valued utility that offers best-in-class margins, though its heavy reliance on Texas regulators and constant need for external capital make it a concentrated bet on regional political stability.

Source: Synthesis · LLM Analysis

3 min read

1. Top 5 Material Risks

Regulatory Lag: Atmos Energy must often place assets in service before receiving rate relief, creating a period where Atmos Energy bears costs without corresponding revenue adjustments.
Geographic Concentration: Approximately 75 percent of consolidated operations are located in Texas, making Atmos Energy’s financial results highly sensitive to the state’s specific economic conditions, weather patterns, and regulatory decisions.
Capital Intensity and Market Access: Atmos Energy requires significant, ongoing capital expenditures to modernize infrastructure and comply with safety regulations, necessitating consistent access to credit and capital markets.
Operational Hazards: Storing and transporting natural gas involves inherent risks of leaks, accidents, and explosions, which could lead to significant repair costs, regulatory fines, and legal liabilities.
Cybersecurity Threats: As a critical infrastructure provider, Atmos Energy is a target for cyber-attacks that could disrupt operations, lead to the unauthorized release of sensitive data, and require significant expenditures to remediate vulnerabilities.

2. Company-Specific Risks

Pipeline Integrity Programs: Atmos Energy must comply with PHMSA requirements to evaluate and repair segments in "high consequence areas," which can lead to significant, potentially non-recoverable, short-term operating costs.
Pension and Postretirement Obligations: Atmos Energy’s financial condition is subject to the performance of assets funding its benefit plans, where poor investment returns or lower interest rates may necessitate accelerated funding requirements.
Purchased Gas Cost Volatility: Rapid increases in gas costs can force Atmos Energy to carry higher levels of short-term or long-term debt while waiting to recover these costs from customers, potentially increasing bad debt expense.
Workforce Retention: Atmos Energy faces intense competition for talent, and an inability to recruit or retain qualified personnel could lead to a loss of institutional knowledge, increased safety compliance issues, and higher contract labor costs.

3. Regulatory/Legal Risks

FERC Oversight: Atmos Energy is subject to FERC rules regarding interstate pipeline and storage capacity, which carry increased penalties for market manipulation or non-compliance.
Environmental Compliance: Atmos Energy must adhere to federal, state, and local laws governing air and water discharges, hazardous waste disposal, and site reclamation; failure to comply can result in significant fines or operational interruptions.
Safety Oversight: Increasing federal, state, and local oversight of pipeline safety requires ongoing monitoring of more than 81,000 miles of distribution and transmission lines, with costs that may not always be fully recoverable through rates.
Greenhouse Gas Legislation: Legislative initiatives to limit greenhouse gas emissions could impose new costs or restrictions on end users, potentially reducing demand for natural gas or making services prohibitively expensive.

4. Financial Impact Map

Regulatory Lag → Operating Costs → Negative financial effects from placing assets in service without immediate rate relief. Geographic Concentration (Texas) → Consolidated Financial Results → 75 percent of operations are subject to localized economic and regulatory volatility. Capital Intensity → Long-term Debt / Equity → Liquidity requirements for infrastructure modernization depend on access to credit and capital markets. Operational Hazards → General Liability and Property Insurance / Operating Costs → Potential for costs exceeding insurance limits or deductibles following accidents or leaks. Purchased Gas Cost Volatility → Short-term or Long-term Debt → Rapid cost increases require Atmos Energy to fund gas purchases significantly in advance of customer collections.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
8-K	Feb 2026	—
10-Q	Feb 2026	Dec 2025
14A	Dec 2025	—
10-K	Nov 2025	Sep 2025