Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

We retain our Neutral recommendation on ONEOK Inc. (OKE - Analyst Report) due to the company’s recent quarter miss. The company’s second quarter results of 51 cents per share lagged the Zacks Consensus Estimate of 55 cents. Though the company’s second quarter miss was slightly disappointing, we believe the company has the potential to match up to its revised guidance.

ONEOK raised the mid-point of its operating income guidance for 2011 to $1,012 million, while it has tweaked the net income expectation to a range of $325 million to $345 million.

Tulsa, Oklahoma-based ONEOK Inc. is strongly positioned in the mid-continent natural gas market. The primary growth vehicle for the company has been its master limited partnership (MLP) ONEOK Partners L.P. (OKS - Analyst Report), which contributes substantially to the company’s results.

Going forward, the company continues to target growing earnings through asset optimization and expansion. We expect ONEOK to grow earnings above its industry peers through internal development coupled with acquisitions.

Apart from strong operational virtues, the company’s practice of rewarding shareholders by constantly raising dividends continues to impress us. ONEOK’s above-industry-average dividend yield offers a solid opportunity for income-oriented investors, in our view.

On the negative side, the company remains prone to the volatile credit markets, utility regulations, weather impacts and unpredictable commodity prices, which blunt our optimism about the stock.

ONEOK’s operations are subject to various federal, state, and local regulations, as well as extensive environmental regulations. The company’s profitability largely depends on its ability to pass costs related to providing energy and other commodities to customers by obtaining the required regulatory approvals.

The company’s business is also sensitive to fluctuations in weather. The demand for natural gas and some of ONEOK Partners’ products, namely propane, is weather sensitive and seasonal. This seasonality and deviations in weather conditions may cause variations in the company’s earnings and short-term cash requirements.

ONEOK Inc. is a diversified energy company, operating as a natural gas distributor primarily in the United States. The company presently has a Zacks #3 Rank, which translates into a short-term Hold rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%