It has been about a month since the last earnings report for ONE Gas (OGS Quick QuoteOGS - Free Report) . Shares have added about 8.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is ONE Gas due for a pullback? 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 catalysts.

ONE Gas Beats Q4 Earnings Estimates, Adds Customers

ONE Gas Inc. reported fourth-quarter 2020 earnings of $1.09 per share, beating the Zacks Consensus Estimate of $1.06 by 2.8%.

The bottom line also improved 13.5% from the year-ago earnings, primarily owing to new rates, higher sales volumes in Kansas and Oklahoma, along with residential customer growth.

Total Revenues

The company recorded revenues of $484.2 million for the fourth quarter, which surpassed the Zacks Consensus Estimate of $461 million by 5.1%. The top line also improved 6.9% from the year-ago level.

Quarterly Highlights

Residential natural gas sales volume for the fourth quarter was 42.9 billion cubic feet (Bcf), up 2.6% year over year. Total volumes delivered in the same period were 113.8 Bcf, down 0.5% from the year-ago period due to lower commercial and industrial sales volume.

Total operating expenses for the reported quarter increased 6.1% from the year-ago figure to $190.9 million.

Operating income for the reported quarter improved 3.9% year over year to $85.1 million.

For fourth-quarter 2020, ONE Gas’ customer base rose 1.4% from the year-ago period, primarily due to additions to the residential customer group.

It incurred net interest expenses of $15.4 million, down 1.9% from the prior-year figure.

Capital expenditures and asset removal costs were $134.3 million for the reported quarter compared with $121.2 million in the year-ago period, primarily due to increased system integrity activities and extension of services to new areas.

Financial Highlights

As of Dec 31, 2020, ONE Gas had cash and cash equivalents of $8 million compared with $17.9 million at 2019-end.

Long-term debt (excluding current maturities) was $1,582.2 million as of Dec 31, 2020 compared with $1,286.1 million in the corresponding period of 2019.

Cash provided by operating activities for 2020 was $364.5 million compared with $310.3 million in 2019.

Guidance

ONE Gas reaffirmed 2021 net income guided range of $198-$210 million and earnings per share expectation in the $3.68-$3.92 band. The midpoint of its EPS guidance is $3.80, lower than the current Zacks Consensus Estimate of $3.83 for the period.

Capital expenditure is expected to be $540 million for 2021, with more than 70% of the amount targeted for system integrity and the balance primarily for customer growth.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, ONE Gas has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. 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 this revision indicates a downward shift. Notably, ONE Gas has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.