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Highlights:
- Revenue of The AES Corporation (AES) was over US$ 3.62 billion in Q3 FY22.
- The AES stock rose over 17 per cent YTD.
- The revenue of Atmos Energy Corporation (ATO) was US$ 722.62 million in Q4 FY22.
Utilities are one of the major sectors in the US, that offers its services to almost everyone, be it consumers or businesses. The sector offers necessary services like electricity, natural gas, etc.
Due to the necessary services the sector offers, investors typically keep a close watch on it. In addition, many of the heavily regulated utility service providers offer dividends to the investors, which also makes it attractive to them.
Besides, the demand for their services tends to remain stable irrespective of the health of the nation's economy. This also makes it attractive to some investors, especially during times of economic turmoil.
Now, the market has gone through a catastrophe so far through 2022, due to higher inflation, soaring policy rates, and other concerns in the market. Fed's aggressive approach with its policy rates has also spurred fears over a potential recession in the economy.
Having said that, many investors have kept track of the utility sector's performance, for cues on how the companies are performing amid the hovering uncertainties in the market.
Today, we would explore two utility companies, which include The AES Corporation (NYSE:AES), and Atmos Energy Corporation (NYSE:ATO), and see how they have performed in recent days.
The AES Corporation (NYSE:AES)
The utility and power generation firm, The AES Corporation holds a dividend yield of 2.22 per cent. The company's stock, which owns and manages power plants to generate and sell electricity, soared 17 per cent year-to-date and about 16 per cent YoY.
The AES stock touched its 52-week high of US$ 28.57 on November 11 and added over 26 per cent through the quarter. The company started construction on 1.9 GW of new projects during the third quarter of fiscal 2022.
In Q3 FY22, The AES Corporation's revenue increased to US$ 3.62 billion from US$ 3.03 billion in the year-ago period. The utility company's net income totaled US$ 446 million in the quarter, down from US$ 485 million in Q3 FY21.
The company expects its annual adjusted EPS to be at or near the high end of its guidance range of US$ 1.55 to US$ 1.65 apiece. It has reaffirmed its annualized growth rate of seven per cent to nine per cent through 2025, from the base year of 2020.
Atmos Energy Corporation (NYSE:ATO)
The natural gas distribution firm, Atmos Energy Corporation, had a dividend yield of 2.29 per cent. The stock of the leading natural-gas-only distributor that claims to provide its services in over 1,400 communities in nine states, rose 13 per cent YTD and about 24 per cent YoY.
Atmos Energy Corporation's revenue was US$ 722.62 million in Q4 FY22, and its net income totaled US$ 71.64 million. In the year-ago period, the company's net income was US$ 48.72 million on revenue of US$ 568.38 million.
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Bottom line:
Some investors consider the utility sector as a stable investment, due to a constant demand for their services, even during an economic downturn. In addition, some of the utility companies also generate reliable earnings, as the companies offer the necessary services to the people.
The market participants typically explore opportunities in the sector, especially during the volatile period in the market. In addition, some also include utility stocks in their portfolio for a retirement strategy.
The S&P 500 utilities index rose nearly four per cent YoY while declining about two per cent through the year.
