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Oneok (OKE) Down 10.6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Oneok Inc. (OKE - Free Report) . Shares have lost about 10.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Oneok due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
ONEOK's Earnings Miss Estimates in Q2, Revenues Beat
ONEOK posted second-quarter 2020 operating earnings of 32 cents per share, which missed the Zacks Consensus Estimate of 50 cents by 36%. Also, the bottom line plunged 57.3% on a year-over-year basis.
Due to the negative impact of COVID-19 on demand and prices of crude oil, most E&P companies voluntarily ramped down production volumes. This, in turn, induced weak volumes in ONEOK’s pipeline, thereby impacting its results.
Revenue Results
Total revenues of $1,660.7 million surpassed the Zacks Consensus Estimate of $1,641 million by 1.2%. However, the top line declined 32.4% from $2,457.6 million in the prior-year quarter.
Highlights of the Release
The company spent $940.5 million on cost of sales and fuel, down 42.1% from the year-ago quarter’s level.
In the second quarter, ONEOK’s adjusted EBITDA were $533.9 million, down 15.6% year over year.
The company incurred interest expenses of $219 million, up 86.4% from $117.5 million in the prior-year quarter.
The company’s operating income of $355.7 million in the second quarter was down 25.3% from $476.1 million in the prior-year quarter.
Financial Highlights
As of Jun 30, ONEOK had cash and cash equivalents worth $945.7 million compared with $21 million as of Dec 31, 2019.
Long-term debt (excluding current maturities) was $14,276.2 million as of Jun 30, 2020, up from $12,479.7 million as of Dec 31, 2019.
The company’s cash provided by operating activities at the end of the first half of 2020 was $736.4 million, down from $968 million at the end of first-half 2019.
Capital expenditures (less allowance for equity funds used during construction) amounted to $1,544 million at the end of first-half 2020, down from $1,720.2 million in the same period of 2019.
Guidance
For second-half 2020, ONEOK projects total capital expenditures between $300 and $400 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Oneok has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Oneok has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Oneok (OKE) Down 10.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Oneok Inc. (OKE - Free Report) . Shares have lost about 10.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Oneok due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
ONEOK's Earnings Miss Estimates in Q2, Revenues Beat
ONEOK posted second-quarter 2020 operating earnings of 32 cents per share, which missed the Zacks Consensus Estimate of 50 cents by 36%. Also, the bottom line plunged 57.3% on a year-over-year basis.
Due to the negative impact of COVID-19 on demand and prices of crude oil, most E&P companies voluntarily ramped down production volumes. This, in turn, induced weak volumes in ONEOK’s pipeline, thereby impacting its results.
Revenue Results
Total revenues of $1,660.7 million surpassed the Zacks Consensus Estimate of $1,641 million by 1.2%. However, the top line declined 32.4% from $2,457.6 million in the prior-year quarter.
Highlights of the Release
The company spent $940.5 million on cost of sales and fuel, down 42.1% from the year-ago quarter’s level.
In the second quarter, ONEOK’s adjusted EBITDA were $533.9 million, down 15.6% year over year.
The company incurred interest expenses of $219 million, up 86.4% from $117.5 million in the prior-year quarter.
The company’s operating income of $355.7 million in the second quarter was down 25.3% from $476.1 million in the prior-year quarter.
Financial Highlights
As of Jun 30, ONEOK had cash and cash equivalents worth $945.7 million compared with $21 million as of Dec 31, 2019.
Long-term debt (excluding current maturities) was $14,276.2 million as of Jun 30, 2020, up from $12,479.7 million as of Dec 31, 2019.
The company’s cash provided by operating activities at the end of the first half of 2020 was $736.4 million, down from $968 million at the end of first-half 2019.
Capital expenditures (less allowance for equity funds used during construction) amounted to $1,544 million at the end of first-half 2020, down from $1,720.2 million in the same period of 2019.
Guidance
For second-half 2020, ONEOK projects total capital expenditures between $300 and $400 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Oneok has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Oneok has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.