Zacks Industry Outlook Features Atmos Energy, Spire, and Northwest Natural

Press Release Overview

Chicago, IL – March 12, 2026 – Zacks Equity Research has released an analysis focusing on Atmos Energy Corp. (ATO), Spire Inc. (SR), and Northwest Natural Holding Co. (NWN).

Industry Focus: Gas Utilities

Natural Gas Distribution: Market Overview

Natural gas utilities play a vital role in delivering gas from production sites to millions of customers nationwide. Companies in the Utility Gas Distribution sector manage extensive underground pipeline networks to ensure reliable service. As the demand for cleaner energy sources rises, these companies are well-positioned to benefit from the growing preference for natural gas.

Atmos Energy Corp. stands to gain from increased natural gas usage due to its broad transmission and distribution network, interstate pipelines, and ongoing infrastructure investments. Similarly, Spire Inc. and Northwest Natural Holding Co. are expected to see positive results from their continued investments and network expansion in key regions.

Industry Insights

The surge in natural gas production, driven by the shale revolution, has led to higher demand across all customer types. Distribution pipelines are essential for moving gas from main transmission systems to end users. The U.S. possesses approximately 3,353 trillion cubic feet of natural gas resources and relies on an expansive pipeline system spanning nearly 2.5 million miles to serve consumers.

However, the industry faces significant hurdles, including the need to upgrade aging infrastructure and the financial burden of maintaining such a vast network, especially as interest rates rise. Additionally, competition from alternative clean energy sources could impact natural gas demand and pipeline utilization rates.

Three Major Trends Shaping Gas Distribution

• Aging Infrastructure Presents Operational Risks:

  Many pipelines in the U.S. are approaching the end of their service life, creating challenges for the industry. While upgrades and expansions are ongoing, a large portion of the network still requires attention, raising concerns about safety, methane emissions, and reliability. Pipeline leaks can disrupt service, increase safety risks, and drive up costs.

• Rising Competition from Renewables:

  Natural gas is facing mounting competition from renewable energy sources. Technological advancements have reduced the cost of large-scale renewable projects, and battery storage solutions are making renewable energy more reliable. As renewables become more affordable and on-site generation reduces reliance on long-distance pipelines, investments in new gas infrastructure face greater economic uncertainty.

• Lower Interest Rates Provide Relief:

  Utilities, which often require significant capital for maintenance and expansion, benefit from lower borrowing costs. The Federal Reserve has cut its benchmark rate by 175 basis points, with further reductions anticipated in 2026. This trend is favorable for utilities planning major infrastructure projects.

Industry Outlook: Short-Term Challenges

The Zacks Industry Rank for Utility Gas Distribution currently stands at #155 out of 243 industries, placing it in the lower third. Historically, industries ranked in the top half outperform those in the bottom half by more than two to one. The sector’s current position reflects a less optimistic earnings outlook for its constituent companies.

Before highlighting select gas distribution stocks, let’s review the industry’s recent market performance and valuation metrics.

Performance and Valuation

Over the past year, the Gas Distribution industry has delivered a 24.5% gain, outpacing the S&P 500’s 24.4% but trailing the Utility sector’s 27.5% growth.

Valuation-wise, the industry trades at a trailing 12-month EV/EBITDA ratio of 12.8, compared to 17.73 for the S&P 500 and 14.86 for the broader Utility sector. Over the last five years, the industry’s EV/EBITDA has ranged from a low of 9.73 to a high of 15.71, with a median of 11.86.

Three Gas Distribution Stocks to Watch

• Atmos Energy (ATO)

  Headquartered in Dallas, TX, Atmos Energy focuses on regulated natural gas distribution and storage. The company invested $3.6 billion in 2025 and plans to allocate $4.2 billion in 2026 to further enhance its infrastructure and serve a growing customer base. Ongoing pipeline replacements and service reliability are key priorities. The current dividend yield is 2.16%, higher than the S&P 500’s 1.42%. Projected long-term earnings growth is 7.01%, with consensus estimates indicating earnings per share growth of 10.19% in 2026 and 6.49% in 2027.

• NW Natural Holdings (NWN)

  Based in Portland, OR, NW Natural Holdings provides regulated gas distribution to over 1 million customers across seven states, as well as water and wastewater services. Capital expenditures for 2026 are expected to be between $500 million and $550 million, with a five-year investment plan totaling $2.6 to $2.9 billion. The dividend yield stands at 3.77%. Consensus estimates project earnings per share growth of 4.1% in 2026 and 5.25% in 2027.

• Spire Inc. (SR)

  Operating out of St. Louis, MO, Spire Inc. continues to grow through strategic infrastructure investments and innovation. The company anticipates $11.2 billion in capital investments over the next decade. Spire’s dividend yield is 3.59%, with long-term earnings growth estimated at 12%. Earnings per share are expected to rise by 15.77% in 2026 and 11.54% in 2027, according to consensus forecasts.

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Contact Information

Zacks Investment Research
800-767-3771 ext. 9339
https://www.zacks.com

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Additional Resources

• Atmos Energy Corporation (ATO): Free Stock Analysis Report
• Northwest Natural Gas Company (NWN): Free Stock Analysis Report
• Spire Inc. (SR): Free Stock Analysis Report

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