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ONE Gas (OGS) Issues 2017 Guidance, Updates 5-Year Plan
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Rate-regulated natural gas utility ONE Gas Inc. (OGS - Free Report) issued its earnings guidance for 2017 and updated its 5-year growth plan.
Highlights for 2017
ONE Gas expects operating income of $293 million and interest expense of $45 million.
Earnings are projected in the range of $2.87–$3.07 per share, while net income is anticipated to be $152 million to $162 million. The bottom line will be driven by new gas rates and normal weather conditions in its service territories.
Effective Jan 1, One Gas has adopted a new accounting standard for share-based compensation. This will lower its income tax expenses and boost its net income by $4 million or 8 cents per share in 2017.
ONE Gas expects to invest $350 million during the year, out of which $255 million will be utilized in system integrity and replacements, $72 million in customer growth and $23 million in other development activities.
5-Year Growth Plan
ONE Gas expects net income and earnings per share to increase an average 5–7% annually in the 2016–2021 time frame. The company expects rate base to grow at an average 5.0–5.5% a year during this period.
Capital expenditure is envisioned in the range of $350 million to $380 million per year in 2017–2021. The recently projected range is higher than the prior guidance of $305 million to $325 million per year in 2016–2020.
The company expects the average annual dividend growth rate to be 8% to 10% between 2016 and 2021, with a targeted dividend payout ratio of 55% to 65% of net income during this time frame.
Our View
ONE Gas is expected to benefit from the increasing usage of natural gas in energy generation. Although the sudden increase in its prices may lead to reduced utilization of the fuel, its clean-burning nature makes natural gas popular among utility operators who are trying to lower emission levels to meet state pollution mandates.
Price Movement
Over the last 12 months, ONE Gas underperformed the Zacks categorized Utility – Gas Distribution industry. During this period, the company’s shares gained 21.3%, compared with the industry’s increase of 28.3%.
Zacks Rank & Key Picks
ONE Gas currently has a Zacks Rank #2 (Buy). Other favorably placed stocks in the same space include MDU Resources Group, Inc. (MDU - Free Report) , Vectren Corporation and Clean Energy Fuels Corp. (CLNE - Free Report) . MDU Resources sports a Zacks Rank #1 (Strong Buy), while Vectren and Clean Energy Fuels both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
MDU Resources’ earnings surpassed the Zacks Consensus Estimate by 4.7% in the last reported quarter. For 2017, its estimates improved 4.5% to $1.38 in the last 60 days.
Vectren’s earnings surpassed the Zacks Consensus Estimate by 15.6% in the last reported quarter. For 2017, its estimates improved by a penny to $2.67 in the last 60 days.
Clean Energy Fuels surpassed the Zacks Consensus Estimate by 9.1% in the last reported quarter. For 2017, its loss estimates narrowed to 49 cents from 50 cents in the last 60 days.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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ONE Gas (OGS) Issues 2017 Guidance, Updates 5-Year Plan
Rate-regulated natural gas utility ONE Gas Inc. (OGS - Free Report) issued its earnings guidance for 2017 and updated its 5-year growth plan.
Highlights for 2017
ONE Gas expects operating income of $293 million and interest expense of $45 million.
Earnings are projected in the range of $2.87–$3.07 per share, while net income is anticipated to be $152 million to $162 million. The bottom line will be driven by new gas rates and normal weather conditions in its service territories.
Effective Jan 1, One Gas has adopted a new accounting standard for share-based compensation. This will lower its income tax expenses and boost its net income by $4 million or 8 cents per share in 2017.
ONE Gas expects to invest $350 million during the year, out of which $255 million will be utilized in system integrity and replacements, $72 million in customer growth and $23 million in other development activities.
5-Year Growth Plan
ONE Gas expects net income and earnings per share to increase an average 5–7% annually in the 2016–2021 time frame. The company expects rate base to grow at an average 5.0–5.5% a year during this period.
Capital expenditure is envisioned in the range of $350 million to $380 million per year in 2017–2021. The recently projected range is higher than the prior guidance of $305 million to $325 million per year in 2016–2020.
The company expects the average annual dividend growth rate to be 8% to 10% between 2016 and 2021, with a targeted dividend payout ratio of 55% to 65% of net income during this time frame.
Our View
ONE Gas is expected to benefit from the increasing usage of natural gas in energy generation. Although the sudden increase in its prices may lead to reduced utilization of the fuel, its clean-burning nature makes natural gas popular among utility operators who are trying to lower emission levels to meet state pollution mandates.
Price Movement
Over the last 12 months, ONE Gas underperformed the Zacks categorized Utility – Gas Distribution industry. During this period, the company’s shares gained 21.3%, compared with the industry’s increase of 28.3%.
Zacks Rank & Key Picks
ONE Gas currently has a Zacks Rank #2 (Buy). Other favorably placed stocks in the same space include MDU Resources Group, Inc. (MDU - Free Report) , Vectren Corporation and Clean Energy Fuels Corp. (CLNE - Free Report) . MDU Resources sports a Zacks Rank #1 (Strong Buy), while Vectren and Clean Energy Fuels both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
MDU Resources’ earnings surpassed the Zacks Consensus Estimate by 4.7% in the last reported quarter. For 2017, its estimates improved 4.5% to $1.38 in the last 60 days.
Vectren’s earnings surpassed the Zacks Consensus Estimate by 15.6% in the last reported quarter. For 2017, its estimates improved by a penny to $2.67 in the last 60 days.
Clean Energy Fuels surpassed the Zacks Consensus Estimate by 9.1% in the last reported quarter. For 2017, its loss estimates narrowed to 49 cents from 50 cents in the last 60 days.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>