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ONEOK (OKE) Gains from Expansion Efforts, Fee-Based Earnings
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ONEOK, Inc. (OKE - Free Report) is well-poised to gain from its strategic acquisition of ONEOK Partners, increased fee-based earnings and midstream assets located in the higher productive regions.
The Zacks Consensus Estimate for the company’s 2021 earnings is pegged at $3.31 per share, suggesting growth of 133.10% from the year-ago reported figure. The consensus mark for revenues stands at $13.93 billion, indicating an increase of 63.09% from the prior-year reported number. The long-term (three to five years) earnings growth rate of ONEOK is 6%.
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. Also, no single customer contributes more than 10% to ONEOK’s total revenues.
In a way, this gives stability to its top line and in fact, the loss of a single customer is not going to affect the company’s performance. 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 company’s pipeline business are potential growth deterrents. Also, it does not own all the land on which its pipelines are located, which heightens its risks of incurring high expenses to maintain necessary land use.
In the past six months, shares of the company have rallied 40.7% compared with the industry’s 11.4% rise.
Stocks to Consider
Some better-ranked utilities are UGI Corp. (UGI - Free Report) , NewJersey Resources Corp. (NJR - Free Report) and Avista Corp. (AVA - Free Report) , all presently carrying a Zacks Rank #2 (Buy).
UGI Corp. delivered a trailing four-quarter earnings surprise of 58.23%, on average. The company has a long-term (three to five years) earnings growth rate of 8%.
NewJersey Resources has a long-term earnings growth rate of 7.1%. The Zacks Consensus Estimate for fiscal 2021 earnings has been revised 16.8% upward in the past 60 days.
The Zacks Consensus Estimate for Avista’s 2021 earnings has been revised 1.4% upward in the past 60 days. It has a long-term earnings growth rate of 5.44%.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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ONEOK (OKE) Gains from Expansion Efforts, Fee-Based Earnings
ONEOK, Inc. (OKE - Free Report) is well-poised to gain from its strategic acquisition of ONEOK Partners, increased fee-based earnings and midstream assets located in the higher productive regions.
The Zacks Consensus Estimate for the company’s 2021 earnings is pegged at $3.31 per share, suggesting growth of 133.10% from the year-ago reported figure. The consensus mark for revenues stands at $13.93 billion, indicating an increase of 63.09% from the prior-year reported number. The long-term (three to five years) earnings growth rate of ONEOK is 6%.
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. Also, no single customer contributes more than 10% to ONEOK’s total revenues.
In a way, this gives stability to its top line and in fact, the loss of a single customer is not going to affect the company’s performance. 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 company’s pipeline business are potential growth deterrents. Also, it does not own all the land on which its pipelines are located, which heightens its risks of incurring high expenses to maintain necessary land use.
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 40.7% compared with the industry’s 11.4% rise.
Stocks to Consider
Some better-ranked utilities are UGI Corp. (UGI - Free Report) , NewJersey Resources Corp. (NJR - Free Report) and Avista Corp. (AVA - Free Report) , all presently carrying a Zacks Rank #2 (Buy).
UGI Corp. delivered a trailing four-quarter earnings surprise of 58.23%, on average. The company has a long-term (three to five years) earnings growth rate of 8%.
NewJersey Resources has a long-term earnings growth rate of 7.1%. The Zacks Consensus Estimate for fiscal 2021 earnings has been revised 16.8% upward in the past 60 days.
The Zacks Consensus Estimate for Avista’s 2021 earnings has been revised 1.4% upward in the past 60 days. It has a long-term earnings growth rate of 5.44%.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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