Industry Overview - Natural gas distribution companies transport natural gas from production regions to consumers across the U.S., utilizing extensive underground pipeline networks [1] - The industry is transitioning towards cleaner energy, with natural gas serving as a critical bridge fuel for decarbonization goals [1] - The U.S. has 3,353 trillion cubic feet of natural gas and operates a 2.6-million-mile pipeline network, but faces challenges from aging infrastructure and competition from alternative energy sources [3] Future Outlook - U.S. Energy Information Administration (EIA) projects an increase in domestic dry natural gas production in 2025, particularly in the Permian and Eagle Ford regions [4] - LNG export volumes are expected to rise by 22.7% year-over-year in 2025 and 9.6% in 2026, highlighting the importance of gas pipelines for transportation to export terminals [4] - Interest rates have declined by 100 basis points, benefiting capital-intensive utilities planning infrastructure upgrades [5] Investment Opportunities - Natural gas utilities are investing approximately $37 billion annually to enhance the reliability of distribution and transmission systems, indicating long-term growth potential [6] - The Zacks Utility Gas Distribution industry ranks 52, placing it in the top 21% of the 244 Zacks industries, reflecting strong near-term prospects [7][8] Performance Metrics - The Gas Distribution industry has outperformed the S&P 500 and the Utility sector over the past year, with an 18.1% gain compared to 10.8% for the S&P 500 [9] - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 11.12X, lower than the S&P 500's 16.96X and the sector's 15.09X, suggesting a potential valuation opportunity [12] Company Highlights - **Atmos Energy Corporation (ATO)**: Plans to invest $3.7 billion in fiscal 2025, with a current dividend yield of 2.23% and long-term earnings growth projected at 7.19% [18][19] - **UGI Corporation**: Expected to invest $3.7-$4.1 billion through fiscal 2027, with a dividend yield of 4.12% and long-term earnings growth of 5.2% [22][23] - **ONE Gas Inc. (OGS)**: Aims to invest $4 billion through 2029, with a dividend yield of 3.64% and long-term earnings growth of 5.6% [26][27] - **Northwest Natural Holding Company (NWN)**: Plans to invest $2.5-$2.7 billion through 2030, with a dividend yield of 3.64% [30][31]

Key Takeaways Volatility has returned to Wall Street amid escalating tensions between Iran and Israel, with the United States gradually getting dragged into it. Although the United States has not yet been directly drawn into the conflict, President Donald Trump is weighing whether to strike Iran. Given the worsening situation, it would be ideal to invest in safe-haven defensive stocks from the utility sector such as Atmos Energy Corporation (ATO) , Fortis, Inc. (FTS) , MDU Resources Group, Inc. (MDU) and Ni ...

Last Friday, Enbridge Inc. (ENB) reported first-quarter 2025 earnings that exceeded expectations. This was driven by higher contributions from its major business segments like Liquids Pipelines, Gas Transmission, and Gas Distribution and Storage. Thus, the strong utilization of the asset base is contributing to a strong business outlook.Before analyzing the factors driving this positive outlook, let’s review the first-quarter results.ENB’s Q1 Earnings SnapshotEnbridge reported first-quarter adjusted earning ...