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ONEOK's (OKE) Expansion Efforts & Fee-Based Earnings Bode Well

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ONEOK, Inc. (OKE - Free Report) is well-poised to benefit from the ONEOK Partners’ strategic acquisition, increased fee-based earnings and midstream assets located in higher productive regions.

The Zacks Consensus Estimate for the company’s 2021 earnings is pegged at $3.08 per share, suggesting year-over-year growth of 116.9%. The consensus mark for revenues is pegged at $11.6 billion that indicates year-over-year increase of 35.9%. The long-term (three to five years) earnings growth rate of ONEOK is 22.33%.

What’s Aiding the Stock?

ONEOK is well-placed to gain from long-term fee-based commitments to its Natural Gas Gathering and Processing, and Natural Gas Liquids segments. The company reported more than 90% of its 2020 earnings as fee-based.

It continues to invest in organic growth projects for expansion in the existing operating regions and also provides a broad range of services to crude oil and natural gas producers as well as the end-use markets. Amid this unprecedented economic crisis due to the pandemic, the company undertook initiatives to preserve liquidity. Moreover, ONEOK Partners is the primary growth vehicle of ONEOK and the completion of this buyout is likely to be accretive to its distributable cash flow from 2017 through 2021.

Headwinds

However, stringent government regulations and intense competition in the pipeline business are potential growth deterrents. Also, persistently rising long-term debt is a concern to the company.

Zacks Rank & Price Performance

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past six months, shares of the company have rallied 98.2% compared with the industry’s 22.6% rise.

Stocks to Consider

Some other better-ranked utilities are MDU Resources Group, Inc. (MDU - Free Report) , NewJersey Resources Corporation (NJR - Free Report) and Portland General Electric Company (POR - Free Report) , all carrying a Zacks Rank#2 (Buy).

MDU Resources’ Zacks Consensus Estimate for 2021 earnings has been revised 5.1% upward in the past 60 days. It has a long-term (three to five years) earnings growth rate of 5%.

NewJersey Resources has a long-term earnings growth rate of 6%. The Zacks Consensus Estimate for fiscal 2021 earnings has been revised 8.1% upward in the past 60 days.

Portland General Electric delivered a trailing four-quarter earnings surprise of 107%, on average. The company has a long-term earnings growth rate of 13.4%.

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