Atmos Energy (ATO:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Atmos Energy(ATO:NYS)

Utilities:Utilities-Regulated Gas

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$97.29 (USD) 14/11/2018

Weighted Valuation
$97.99 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 0.7%

Valuation Models Analyst Consensus: $104.00 (USD)
(in order of importance) Adjusted Book Value: $90.40 (USD)
Multiples: $95.10 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (ATO:NYS USD)

Price 97.29
Range 95.84 – 97.46
52 week 78.03 – 97.29
Open 96.11
Vol / Avg. 675687/462067
Mkt cap 10.83B
P/E 17.92
Div/yield 1.94/0.02
EPS 5.43
Shares 111.35M
Beta 0.11

Company Description

Atmos Energy is the largest publicly traded, fully regulated, pure-play natural gas utility in the United States, serving more than 3 million customers in Texas, Colorado, Kansas, Kentucky, Louisiana, Mississippi, Tennessee, and Virginia. About two thirds of its earnings come from Texas, where it distributes natural gas in northern Texas, including Dallas, and has a 5,600-mile intrastate gas transmission pipeline spanning several key shale gas formations and interconnected with five storage facilities.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for ATO:NYS

Using a discounted cash flow model we generated an intrinsic value of $283.67 (USD) for ATO:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

ATO:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $283.67 1% 5% 1% 5%
WACC (or Ke) 3.74 $398.50 $217.30
Terminal Growth Rate 0.00 $221.98 $390.40
Tax Rate 0.01 $299.56 $267.78
Cash Flow 1,330,308,030 $267.99 $299.35
Capital Expenditures 0 $283.67 $283.67
Long Term Debt 3,268,590,000 $285.14 $282.20

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $65.34 (USD) for ATO:NYS. We also generated a valuation of $82.42 (USD) using other metrics and comparables.
The comparable companies were New Jersey Resources (NJR:NYS), ONE Gas (OGS:NYS), Spire (SR:NYS), Southwest Gas Holdings (SWX:NYS) and UGI (UGI:NYS).

Company ATO:NYS End Date Value
Earnings/Share $5.43 (USD)
Book Value/Share $42.77 (USD)
Sales/Share $28.58 (USD)
Cash Flow/Share $10.54 (USD)
EBITDA/Share $9.72 (USD)
Price Based on Comps Adjustment Factor (%)
$97.57 (USD) -27.5
$92.87 (USD) -26.2
$47.80 (USD) -26.9
$63.20 (USD) -27.7
$122.47 (USD) -7.4
ATO:NYS Ratios Used Average Values NJR:NYS OGS:NYS SR:NYS SWX:NYS UGI:NYS
17.17 PE Ratio 17.97 18.64 23.91 15.81 18.05 13.43
2.18 PB Ratio 2.17 2.75 2.06 1.59 1.98 2.49
3.26 PS Ratio 1.67 1.41 2.56 1.78 1.36 1.25
8.83 PCF Ratio 9.11 9.48 10.77 7.37 8.95 8.98
12.74 EV to EBITDA 12.60 18.72 12.68 12.82 9.99 8.80

Multiples

Using a multiples approach we generated a valuation of  $95.10 (USD) for ATO:NYS

Company ATO:NYS End Date Value
Earnings/Share $5.43 (USD)
Book Value/Share $42.77 (USD)
Sales/Share $28.58 (USD)
Cash Flow/Share $10.54 (USD)
EBITDA/Share $9.72 (USD)
Price Based on Comps Adjustment Factor
$112.03 (USD) 0
$92.28 (USD) 0
$62.61 (USD) 0
$96.62 (USD) 0
$111.99 (USD) 0
Ratios Ratio Average
PE Ratio 20.63
PB Ratio 2.16
PS Ratio 2.19
PCF Ratio 9.16
EV to EBITDA 11.52

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  ATO:NYS for the last 10 years was  2.11

We ran the Adjusted Book Value for  ATO:NYS and generated a book value of  $42.87 (USD)
By multiplying these we get an adjusted valuation of  $90.40 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for ATO:NYS. The 2 analysts have a concensus valuation for ATO:NYS for 2019 of $104.00 (USD).

ATO:NYS Atmos Energy

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 0 0 4.2500 Outperform 2018-11-13

Current Price: 97.29 USD

Analyst Consensus
USD Millions 2019 2020
Mean EPS 4.23 4.55
# EPS Analysts 4 2
Mean Revenue 4,338.30 3,809.10
# Revenue Analysts 3 2
Mean Target Price 104.00
Mean Cash Flow 8.79 9.01
Mean EBITDA 1,181.90 1,282.30
Mean Net Income 489.70 532.90
Mean Debt Outstanding 3,866.90 4,001.50
Mean Tax Rate 22.00 22.00
Mean Growth Rate 7.30
Mean Capital Expenditure 1,585.00 1,662.50

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User


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