Back to top

Image: Bigstock

ONEOK (OKE) Q2 Earnings: What's in Store for the Stock?

Read MoreHide Full Article

Diversified energy company, ONEOK Inc. (OKE - Free Report) is scheduled to report second-quarter 2016 results on Aug 2, after the closing bell. Last quarter, the company reported a negative earnings surprise of 4.76%. Let’s see how things are shaping up for this quarter.

Factors to Consider

Of late, a number of energy companies have been venturing into the midstream space through the formation of master limited partnerships (MLPs). As a result, competition in this market is intensifying, which may dent ONEOK’s margins. In addition, the company expects procedural delays on the completion of some large multi-well pads to impact production volumes over the next several months and potentially through the remainder of 2016.

However, ONEOK’s contract restructuring efforts and cost controlling initiatives should boost its cash flows. Further, improvement in commodity prices in the second quarter spurred producers to resume drilling, in turn, drivingdemand for midstream services.

Earnings Whispers

Our proven model does not conclusively show that ONEOK will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -4.65%. This is because the Most Accurate Estimate stands at 41 cents, while the Zacks Consensus Estimate is pegged higher at 43 cents.

ONEOK INC Price and EPS Surprise

ONEOK INC Price and EPS Surprise | ONEOK INC Quote

Zacks Rank: Though ONEOK’s Zacks Rank #2 increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Ranks #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of operators in the oil and gas pipeline space worth considering on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:

UGI Corporation (UGI - Free Report) has an Earnings ESP of +50.00% and a Zacks Rank #3. The company is slated to report third-quarter fiscal 2016 results on Aug 1.

ONE Gas, Inc. (OGS - Free Report) has an Earnings ESP of +16.13% and a Zacks Rank #3. The company is scheduled to report second-quarter 2016 results on Aug 1.

National Fuel Gas Company (NFG - Free Report) has an Earnings ESP of +1.59% and a Zacks Rank #2. The company is expected to report third-quarter fiscal 2016 results on Aug 4.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


ONEOK, Inc. (OKE) - free report >>

UGI Corporation (UGI) - free report >>

National Fuel Gas Company (NFG) - free report >>

ONE Gas, Inc. (OGS) - free report >>

Published in