What are the key differences between electric and gas utilities?

Revenue model: electric utilities charge per kilowatt-hour (kWh) consumed; natural gas utilities charge per therm or Mcf consumed; both also charge base customer charges regardless of usage. Infrastructure: electric utilities own generation plants (or purchase power), high-voltage transmission lines, and distribution lines to individual homes; gas utilities own distribution pipelines, pressure regulation stations, and service lines; electric utilities may or may not own generation; most gas utilities are pure distributors (they buy gas from interstate pipelines and don't own gas production). Commodity pass-through: gas utilities typically pass through the cost of natural gas to customers dollar for dollar through a purchased gas adjustment clause — the gas utility earns no margin on the commodity, only on the distribution service; electric utilities face more complexity because they may own generation assets and have longer-term fuel contracts that create commodity exposure. Seasonal demand: gas utilities have extremely seasonal demand (winter heating drives 60-70% of annual volumes in cold climates); electric utilities have more balanced demand (summer air conditioning + winter heating); gas utilities must manage winter supply adequacy. Capital intensity comparison: electric utilities have very high capital intensity from generation assets (nuclear, natural gas plants, wind farms cost billions each) plus transmission; gas utilities are capital-intensive from pipeline construction but generally less so than utilities that own large power generation assets. Risk profile: gas utilities tend to be slightly lower-risk than electric utilities due to simpler infrastructure (no generation), less weather-related earnings variability (gas utility demand is seasonal but predictable), and fewer catastrophic risk scenarios (no risk analogous to wildfires started by electric distribution lines).

What is the natural gas utility electrification risk and how real is it?

The electrification thesis: as electric heat pumps become more efficient and cost-competitive, and as electricity grids become cleaner (more renewable generation), some analysts argue that residential and commercial customers will increasingly switch from natural gas heating to electric heat pumps; this would reduce gas utility volumes over time; extreme versions of this thesis suggest gas utilities face secular decline as the energy transition accelerates. Counterarguments: gas utilities serve 50+ million U.S. customers; replacing all gas heating infrastructure with electric would cost trillions of dollars and require massive electric grid upgrades (electric heat pumps require more electricity than resistance heating — significantly increasing peak electric demand in cold climates); many homes (particularly in cold climates) have heating loads that make gas economically superior to electricity; the gas stove conversation (policy proposals to ban new gas stoves) has met significant consumer resistance; residential customers rarely voluntarily replace working gas appliances. Atmos's perspective: Atmos Energy argues that natural gas distribution will remain essential for residential heating, industrial processes, and as a bridge fuel for a long time; the company is investing in renewable natural gas (RNG, biomethane from landfills and agricultural waste) and hydrogen blending as options to decarbonize the gas supply without replacing infrastructure; most utility analysts expect gas utility demand to remain relatively stable through 2030-2035 with more meaningful decline risk only beyond that horizon if electrification policies accelerate significantly.

Why do utility stocks underperform when interest rates rise?

Valuation mechanism: utility stocks are often compared to bonds for income investors; when a 10-year U.S. Treasury bond yields 5%, a utility yielding 3.5% is less attractive (you take more risk for less yield compared to a risk-free Treasury); investors sell utilities and buy Treasuries; the selling pressure drives utility prices down until the yield becomes competitive with Treasuries. Discounted cash flow impact: utility earnings are highly predictable but grow slowly (3-6% annually for most regulated utilities); in a DCF model, rising discount rates (which follow interest rate increases) reduce the present value of future earnings; a utility with slow but steady earnings growth is particularly sensitive to discount rate changes because much of its value is in distant future earnings that are heavily discounted. Regulatory allowed ROE relationship: utility commissions set allowed ROEs partly based on capital market conditions; when interest rates rise, the cost of equity rises; eventually, utility commissions increase allowed ROEs in rate cases; this is positive for utility earnings but the process takes years (rate cases every 3-5 years); in the meantime, actual ROEs remain at prior-rate-case levels that may be below the market-implied cost of equity. Historical evidence: the 2022 Federal Reserve rate hike cycle (Fed Funds from 0.25% to 5.5%) caused utility stocks (including Atmos Energy and MGE Energy) to underperform the S&P 500 significantly — the Utilities sector fell approximately 10-15% while the S&P 500 rose; this inverse relationship between rates and utility stocks is one of the most consistent patterns in equity investing.

brimindinvest.com / compare / mgee-vs-atoLIVE

MGEE

MGE Energy, Inc. · Utilities - Electric & Gas Distribution

$75.92

+1.06% this month

VERSUS

⟷

COMPARE

ATO

Atmos Energy Corporation · Utilities - Regulated Natural Gas Distribution

$170.11

-4.29% this month

Scoreboard verdict

Across AI score, momentum, valuation, upside, operating margin

MGEE

1

ATO

3

ATO LEADS 3/5

Comparison scoreboard

ATO LEADS 3/5

AI Score

MGEE 31.6

ATO ✓49.3

1Y Return

MGEE -12.60%

ATO ✓+11.69%

Fwd P/E

MGEE ✓18.29

ATO 18.96

Target Up.

MGEE +0.43%

ATO ✓+9.45%

Op. Margin

MGEE N/A

ATO 39.32%

Metrics last refreshed: 6/22/2026

Quick take

MGEE vs ATO Stock Comparison: AI Score, Valuation, Performance and Upside

MGEE (MGE Energy) and ATO (Atmos Energy) are both regulated utilities but very different in scale and geography — MGE Energy is a compact Madison, Wisconsin electric and gas utility with a loyal customer base and strong renewable energy positioning, while Atmos Energy is the largest U.S. pure-play natural gas LDC with a $16B+ capital program, automatic GRIP rate recovery in Texas, and 6-8% annual EPS growth targeting.

MGEE vs ATO is high-quality compact Wisconsin utility with renewable leadership and stable Madison customer base (MGE Energy's concentrated service territory, Wisconsin PSC constructive regulation, and multi-decade dividend growth — slower growth with quality stability) versus the largest pure-play U.S. natural gas LDC with a massive capital investment program and Texas automatic recovery mechanism (Atmos Energy's 10% annual rate base growth, GRIP-driven Texas earnings visibility, and 6-8% EPS growth target — utility growth compounder with largest-scale pure-play gas distribution) — quality small utility versus scaled natural gas growth compounder.

Live analysis · updated 6/22/2026

ATO holds the edge across 3 of 5 key metrics in this comparison. ATO has delivered stronger 1-year price return (+11.69% vs -12.60%), though MGEE trades at the lower forward P/E (18.29x vs 18.96x). Analyst consensus implies meaningfully more upside for ATO (+9.45%) than for MGEE (+0.43%).

Normalized 1Y performance

MGEE

ATO

Recent returns

MGEE

ATO

Analyst price targets & sentiment

MGEE · 4 analysts

STRONG BUYHOLDSTRONG SELL

Hold (3.0/5.0)

Price target range

analyst low$70.00
analyst high$81.00
analyst mean$76.25
current price$75.92

+0.4% upside to analyst mean

ATO

Price target range

analyst mean$186.18
current price$170.11

+9.4% upside to analyst mean

Who should consider this stock?

MGEE may suit investors who:

→Value MGE Energy's compact, high-quality service territory (Madison, Wisconsin) as providing a stable, predictable utility with consistent dividend growth
→Appreciate MGE's renewable energy leadership in Wisconsin as creating a constructive regulatory relationship that supports rate cases
→Prefer a smaller, focused utility with a long track record of earnings stability over a larger company with higher capital program execution risk

ATO may suit investors who:

→Want a utility with above-average EPS growth (6-8% annually) driven by a large, multi-year safety infrastructure capital investment program
→Value Atmos's Texas GRIP mechanism as providing automatic annual rate recovery without the uncertainty of full rate cases — a utility with built-in earnings growth visibility
→Seek the largest, most liquid pure-play natural gas distribution utility for a core utility allocation with growth characteristics above the sector average

Performance & AI score

Metric	MGEE	ATO
AI score	31.6	49.3
AI rank	#2155	#518
Latest close	$75.92	$170.11
1M return	+1.06%	-4.29%
6M return	-5.49%	+0.56%
1Y return	-12.60%	+11.69%

$10,000 invested — hypothetical growth (dividends reinvested)

How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?

Period	MGEE	ATO
1Y ago	$8.95K (-10.5%) started 2025-06-18	$11.16K (+11.6%) started 2025-06-18
5Y ago	$12.87K (+28.7%) started 2021-06-18	$20.91K (+109.1%) started 2021-06-21
10Y ago	$21.68K (+116.8%) started 2016-06-20	$34.66K (+246.6%) started 2016-06-20

Hypothetical — past performance does not guarantee future results.

Valuation & upside potential

Metric	MGEE	ATO
Market cap	$2.87B	$28.39B
Trailing P/E	19.47	20.98
Forward P/E	18.29	18.96
Price/Sales	3.82	N/A
EV/Revenue	4.96	7.76
Analyst target	$76.25	$186.18
Target upside	+0.43%	+9.45%

Growth, profitability & risk

Metric	MGEE	ATO
Revenue growth	10.80%	0.60%
Earnings growth	15.90%	14.50%
EPS growth	+15.90%	+14.50%
FCF margin	-24.10%	-45.28%
Operating margin	N/A	39.32%
Profit margin	19.03%	27.58%
ROIC proxy	10.95%	9.60%
Return on equity	10.95%	9.60%
Dividend yield	2.51%	2.35%
Beta	0.72	0.60
Debt/equity	69.74	64.59
Current ratio	1.15	1.00
Quick ratio	0.61	0.61

Drawdown & downside risk

Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.

1Y risk snapshot

MGEE max drawdown19.07%

ATO max drawdown13.07%

MGEE max wkly drop8.62%

ATO max wkly drop6.00%

5Y risk snapshot

MGEE max drawdown30.88%

ATO max drawdown19.08%

MGEE max wkly drop10.99%

ATO max wkly drop10.13%

10Y risk snapshot

MGEE max drawdown33.91%

ATO max drawdown32.91%

MGEE max wkly drop26.76%

ATO max wkly drop18.04%

Performance metrics by period

Period	Metric	MGEE	ATO
1Y	Growth	-12.60%	+11.63%
	CAGR	-12.61%	+11.65%
	Sharpe ratio	-0.77	0.50
	Max drawdown	19.07%	13.07%
	Max daily drop	7.61%	2.64%
	Max wkly drop	8.62%	6.00%
5Y	Growth	+14.65%	+89.14%
	CAGR	+2.77%	+13.62%
	Sharpe ratio	0.04	0.54
	Max drawdown	30.88%	19.08%
	Max daily drop	7.61%	4.82%
	Max wkly drop	10.99%	10.13%
10Y	Growth	+71.20%	+175.16%
	CAGR	+5.53%	+10.66%
	Sharpe ratio	0.17	0.37
	Max drawdown	33.91%	32.91%
	Max daily drop	18.30%	12.50%
	Max wkly drop	26.76%	18.04%

Business comparison

Category	MGEE	ATO
Company	MGE Energy, Inc.	Atmos Energy Corporation
Sector	Utilities - Electric & Gas Distribution	Utilities
Industry	N/A	N/A
Core business	MGE Energy is the holding company for Madison Gas and Electric Company, a regulated electric and gas utility serving approximately 160,000 electric customers and 175,000 natural gas customers in south-central Wisconsin, primarily in the Madison metropolitan area. MGE Energy has been a notable leader in renewable energy investment among Wisconsin utilities — investing heavily in wind and solar generation and committing to carbon neutrality goals. MGE Energy is a compact, high-quality urban utility with a service territory centered on Madison (home to the University of Wisconsin) that benefits from a highly educated, economically stable customer base. MGE's regulated electric and gas operations are overseen by the Public Service Commission of Wisconsin (PSC-WI).	Atmos Energy is the largest pure-play natural gas distribution utility in the United States, serving approximately 3.3 million residential, commercial, and industrial customers in Texas, Louisiana, Mississippi, Tennessee, Kentucky, Kansas, Colorado, and Virginia. Atmos distributes natural gas through approximately 75,000 miles of distribution and transmission pipelines. Atmos has committed to spending approximately $16-17B in infrastructure capital over five years (2022-2027) focused on system safety upgrades (replacing aging distribution pipelines, particularly cast iron and bare steel pipelines susceptible to leaks), renewable natural gas (RNG) integration, and hydrogen blending pilot programs. Atmos's large capital program drives consistent annual rate base growth (8-10%) that supports earnings and dividend growth.
Investor focus	Investors track MGE Energy's rate base growth, renewable energy capital investment, allowed ROE from Wisconsin PSC rate cases, earnings per share growth, and dividend growth (MGE has a multi-decade dividend growth history).	Investors track Atmos's rate base growth (10% annual target), regulatory recovery of infrastructure spending (annual GRIP filings in Texas allowing automatic rate increases without full rate cases), EPS growth (6-8% annual target), and dividend growth.

MGEE strengths

→Highly educated, economically stable Madison service territory provides consistent rate base growth opportunity — Madison (University of Wisconsin) has a diverse, knowledge-economy workforce; economic stability and population growth drive new connections and usage
→Strong renewable energy leadership in Wisconsin creates a constructive regulatory relationship — MGE has been proactive in renewable investment (wind, solar) that aligns with Wisconsin policy goals; constructive utility regulators typically provide favorable rate case outcomes for utilities investing in policy-aligned infrastructure
→Decades-long consistent dividend growth demonstrates earnings quality — MGE Energy's dividend history demonstrates the earnings durability of a well-managed, concentrated service territory utility

ATO strengths

→Texas regulatory environment provides annual automatic rate recovery through GRIP mechanism — Texas's Gas Reliability Infrastructure Program (GRIP) allows Atmos to recover distribution infrastructure spending through annual rate filings without a full formal rate case; this accelerates regulatory recovery and reduces earnings uncertainty from rate case cycles
→Largest pure-play natural gas LDC scale provides regulatory and capital market advantages — Atmos's $16B+ capital program over 5 years gives it significant presence in Texas and multistate regulatory proceedings; its scale provides debt financing at investment grade rates competitive with electric utilities
→Pipeline safety investment (replacing aging infrastructure) is supportive of constructive regulation — regulators support infrastructure investment that reduces leak risk and public safety incidents; replacing old cast iron pipes is necessary regardless of rate case outcomes; regulators cannot reasonably deny safety-critical capital

Risks to watch — MGEE

→Compact service territory limits organic growth opportunity — Madison, Wisconsin is not a high-growth Sun Belt market; customer and usage growth is moderate, limiting rate base growth to capital reinvestment rather than new service expansions
→Wisconsin utility regulation must support continued renewable investment at reasonable allowed returns — if the PSC-WI becomes less constructive or denies renewable investment for rate base, MGE's growth plans are constrained
→Small size limits capital market access and analyst coverage — MGE Energy is a small-cap utility; less analyst coverage and lower trading volume may limit institutional ownership and introduce liquidity risk for larger investors

Risks to watch — ATO

→Natural gas utility faces long-term electrification headwinds — as electric vehicles and heat pumps expand, some customers may convert from natural gas heating to electric; long-term load growth assumptions for gas utilities may need revision
→Texas service territory creates concentration risk — the majority of Atmos's customers and rate base are in Texas; significant Texas policy changes or regulatory reversals would have outsized impact
→Large capital program requires consistent access to debt and equity capital markets — Atmos needs to issue equity and debt each year to fund the $3B+ annual capital program; any disruption in capital markets access could delay the investment program

Frequently asked questions

GRIP (Gas Reliability Infrastructure Program): a Texas regulatory mechanism that allows natural gas distribution utilities (primarily Atmos Energy and CenterPoint Energy's Texas gas operations) to annually recover investments in system safety and reliability infrastructure without filing a full general rate case. How it works: each year, Atmos files a GRIP application with the Texas Railroad Commission (RRC, which regulates gas utilities in Texas); the filing documents the capital spent on eligible infrastructure (replacing bare steel and cast iron pipelines, upgrading compressor stations, adding remote monitoring) during the prior 12 months; the RRC reviews the filing and, if approved, allows Atmos to charge customers a small incremental rate to recover the return on and return of the new capital; the GRIP filing cycle takes approximately 6-9 months from filing to new rates being effective. Why it's valuable: without GRIP, Atmos would need to file a full general rate case (which takes 2-3 years, costs millions in legal/consultant fees, and creates earnings uncertainty) every time it made capital investments; GRIP allows annual rate recovery, reducing the regulatory lag between spending capital and earning a return on it; regulatory lag is one of the primary earnings headwinds for capital-intensive utilities; GRIP effectively eliminates regulatory lag for eligible infrastructure investments in Texas, giving Atmos more immediate earnings recovery from its largest capital program. Limitation: GRIP only covers certain safety and reliability infrastructure; not all capital investment qualifies; new customer growth infrastructure typically requires a general rate case.

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+1.1%HOLD

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