Wondering whether Atmos Energy’s current share price offers a bargain or is it running too hot? You are not alone; Getting the right information about value is on every investor’s mind.
The stock is up 0.7% over the past week and 1.7% over the past month, adding up to a strong year-to-date gain of 27.5%.
In recent news, industry discussion has focused on the growing demand for natural gas utilities and regulatory developments affecting rates. Both factors have fueled optimism and attracted the attention of analysts who have been monitoring Atmos’ regional growth. Significant changes in the sector have also prompted new debate about long-term risk and reward for utility stocks like Atmos.
When it comes to valuation, Atmos Energy currently scores a 0 out of 6 on our check for undervaluation. In the next sections, we’ll unpack what this means across different valuation approaches and later introduce a better way to interpret these numbers.
Atmos Energy scores only 0/6 in our evaluation test. See what other red flags we found in the full assessment statement.
The Dividend Discount Model (DDM) is a valuation method that estimates the intrinsic value of a company by estimating future dividends and discounting them back to today’s value. This approach is particularly useful for established companies with a consistent history of dividend payments, like Atmos Energy.
Atmos Energy’s DDM valuation highlights several important points for investors. The company’s most recent annual dividend was $4.49 per share, giving a payout ratio of approximately 47.3%. This level suggests that the dividends are quite sustainable relative to earnings and are supported by an estimated return on equity of 9%. For DDM analysis, future dividend growth is capped at 3.26%, which is lower than the previous estimate of 4.75%. This signals more conservative expectations going forward.
According to DDM, the fair value of Atmos Energy shares is estimated at $121.51. However, with the current share price well above this mark, the model implies the stock is about 45.2% overpriced on a fundamental, dividend-driven basis.
Result: Highly Rated
Our Dividend Discount Model (DDM) analysis suggests Atmos Energy may be overvalued by 45.2%. Search 914 undervalued stocks or create your own screener to find better value opportunities.
ATO Discounted Cash Flow to November 2025
Visit the Valuation section of our company report for more information on how we arrive at this fair value for Atmos Energy.
The price-to-earnings (PE) ratio is a fundamental metric for evaluating established, profitable companies like Atmos Energy. It shows how much investors are willing to pay for each dollar of a company’s current earnings, making it particularly relevant to firms with a track record of consistent profitability and earnings growth.
Growth expectations and risk factors have a large impact on whether a PE ratio is considered “normal” or “reasonable”. Companies with strong growth prospects or low perceived risk typically command higher PE ratios. Conversely, more uncertain or slower-growing companies have lower valuations.
Currently, Atmos Energy is trading at a PE ratio of 23.8x. This figure is significantly higher than the gas utility industry average of 14.4x and above the peer average of 18.1x. At first glance, this might suggest that the stock is priced at a premium compared to other stocks in the sector.
However, Simply Wall St’s proprietary “Fair Ratio” model, which takes into account factors such as earnings growth, profit margin, industry placement, market cap, and company-specific risk, suggests a fair PE ratio of 22.0x for Atmos Energy. Unlike standard benchmarks, the Fair Ratio provides a tailored valuation that goes beyond broad comparisons and considers what is fair given all of a company’s unique strengths and potential risks.
Comparing Atmos Energy’s actual PE ratio of 23.8x to its fair ratio of 22.0x, valuations appear slightly inflated, but not out of the extreme range. The difference is greater than 0.10, indicating that the stock may be trading slightly above fair value based on its fundamentals and outlook.
Result: Highly Rated
NYSE:ATO PE Ratio by November 2025
The PE ratio tells a story, but what if the real opportunity lies elsewhere? Discover 1437 companies where insiders are making big bets on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to narratives. A narrative is simply the story or perspective you have about a company, based on your own assumptions about its future revenues, profits, and margins. Narratives combine your unique perspective about Atmos Energy with a financial forecast, which is then transformed into a fair value estimate, giving meaning and context to the numbers you see.
This approach empowers investors by connecting the company’s story to real data, making it easy to see whether the current price reflects your view of the company’s prospects. Narratives are created and shared directly on Simply Wall St’s community page, an easy-to-use tool used by millions of investors. By comparing your estimated fair value to Atmos Energy’s current share price, you can quickly decide whether now is the time to buy, hold, or sell.
Plus, the narratives are automatically updated as important news or earnings are released, so your investment perspective evolves with the company. For example, some investors may expect Atmos Energy’s strong regional growth and improved profit margins to justify a higher fair value (such as $182.0), while others may focus on legal risks and rising costs, supporting a much lower valuation (as low as $141.0). Narratives let you see and act on the story that best matches your own research and expectations.
Do you think there is more to the story of Atmos Energy? Visit our community to see what others are saying!
NYSE: ATO Community Fair Price by November 2025
This article from Simply Wall St is of a general nature. We only provide commentary based on historical data and analyst forecasts using unbiased methodology and our articles are not intended to provide financial advice. It does not recommend buying or selling any stock, and does not take into account your objectives, or your financial situation. Our goal is to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.
The companies discussed in this article include the ATO.
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