Atmos (ATO) Upgraded to Buy: Here's Why

Core Viewpoint - Atmos Energy (ATO) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [3]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [3]. Business Improvement Indicators - The upgrade in ratings and rising earnings estimates suggest an improvement in Atmos Energy's underlying business, which could lead to higher stock prices as investors respond positively [4]. Importance of Earnings Estimate Revisions - Tracking earnings estimate revisions is crucial for investment decisions, and the Zacks Rank system effectively leverages this information [5]. - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance of Zacks Rank 1 stocks averaging a +25% annual return since 1988 [6]. Specific Earnings Estimates for Atmos - For the fiscal year ending September 2026, Atmos Energy is expected to earn $8.02 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 2.7% over the past three months [7]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of "buy" and "sell" ratings across over 4,000 stocks, with only the top 20% receiving a "Strong Buy" or "Buy" rating [8][9]. - Atmos Energy's upgrade to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [9].