On Jan. 13, the U.S. Bureau of Labor Statistics launched December’s Shopper Value Index information, exhibiting that headline inflation rose at a year-over-year (YOY) tempo of two.7%.
Whereas there have been some shiny spots, together with deflation of -3.4% for gasoline, different figures stood out like a sore thumb. That was precisely the case for piped utility fuel companies, which noticed a staggering 10.8% YOY improve.
That isn’t nice information for Individuals’ already elevated utility payments, particularly because the thick of winter arrives, and residential heating wants improve. However it may very well be excellent news for shareholders of the biggest pure gas-only utility in the US.
Why Utility Fuel Costs Are Surging
Whereas 10.8% YOY inflation shouldn’t be excellent, it isn’t a problem being confronted by Individuals alone. Globally, utility fuel costs are skyrocketing attributable to surging demand, particularly for liquified pure fuel (LNG).
Regardless of the U.S. benchmark offering some reduction to date this yr (-2.94%), the European and United Kingdom’s benchmarks have continued to rise to the tune of 25% and 26% respectively. Extra not too long ago, U.S. LNG futures have surged 17% since Jan. 16 amid an ongoing Arctic blast that has stored a lot of the mainland United States beneath freezing situations.
Rising costs have been exacerbated by restricted home provide failing to maintain tempo with demand, increased manufacturing prices, and the US delivery extra of its domestically produced LNG abroad. On Jan. 2, Reuters reported that in 2025, the US grew to become the primary nation to ever export greater than 100 million metric tons of LNG.
Then, after all, there may be AI information center-driven demand, which depends on LNG—amongst different power inputs—for each energy technology and cooling. In line with Intelligence, information facilities at the moment devour greater than 1 billion cubic toes per day (Bcf/d) of pure fuel. By 2030, forecasts have that consumption rising to between 4 Bcf/d and eight Bcf/d.
All in all, that ought to proceed to profit traders who’ve acknowledged that supply-demand hole and recognized the businesses prone to revenue from inflated costs.
A 120-12 months-Previous Utility Firm That Packs a Progress Punch
Based in 1906 because the Amarillo Fuel Firm, —now headquartered in Dallas—delivers pure fuel to over 3.3 million residential, industrial, and industrial prospects throughout 9 states by way of an enormous pipeline community for heating, cooking, and industrial processes.
The utility serves about 1,400 communities from the Blue Ridge Mountains to the Rocky Mountains, with core companies that embody fuel supply, system integrity and upkeep, storage and transmission connections, and buyer packages equivalent to billing, conservation, and energy-efficiency choices.
Over its previous fiscal yr, Atmos Vitality has seen its earnings per share (EPS) develop by greater than 9.22%, its income develop by practically 13%, and its internet revenue develop by practically 15%.
That has contributed to the corporate’s monetary well being, touchdown its inventory value firmly within the Inexperienced Zone for over 12 months, whereas the inventory has gained greater than 17% throughout that interval and greater than 47% for the reason that begin of 2025.
In the meantime, it continues to reward shareholders decade after decade with its dividend.
A Dividend Aristocrat With a 41-12 months Monitor Document
As a utility inventory, Atmos Vitality defies sure preconceived notions. Corporations belonging to that sector are sometimes thought of defensive investments with sluggish share appreciation and dividends that pay a better-than-average yield.
For Atmos Vitality, solely half of that’s true. With its one-year achieve outpacing the ’s achieve of round 14%, the utility firm has behaved extra like a development inventory.
However in the case of the sector’s fame for revenue, it delivers there, too. The Dividend Aristocrat yields 2.35%—or $4 per share yearly—and has elevated its payout for 41 consecutive years.
In the meantime, the corporate’s annualized five-year dividend development price is 8.63%, and its dividend payout ratio of simply over 53% is taken into account each wholesome and sustainable.
What Wall Avenue Thinks About Atmos Vitality
Primarily based on 14 analysts overlaying the inventory, Atmos Vitality receives a consensus Maintain ranking, with three analysts assigning it a Purchase ranking, 11 assigning it a Maintain, and none assigning it a Promote.
Whereas the common 12-month value goal represents simply 1.67% potential upside, the corporate’s trailing EPS of $7.49 and price-to-earnings (P/E) ratio of twenty-two.75 recommend that earnings ought to develop 7.66% subsequent yr, from $7.18 to $7.73 per share.
Notably, institutional possession stands at a higher-than-average 90.17%, with inflows of $4.62 billion simply outpacing outflows of $2.82 billion. Present brief curiosity of three.19% of the float means that Wall Avenue’s bears are disinterested in betting in opposition to the pure fuel utility big.
Atmos Vitality scores increased than 88% of the businesses evaluated by MarketBeat, and ranks twenty sixth out of 89 shares within the utilities sector.
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