A month has gone by since the last earnings report for ONE Gas (OGS Quick QuoteOGS - Free Report) . Shares have lost about 6.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is ONE Gas due for a breakout? 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 drivers.

ONE Gas Q1 Earnings Beat Estimates, Revenues Up Y/Y

ONE Gas Inc. reported first-quarter 2021 earnings of $1.79 per share, beating the Zacks Consensus Estimate of $1.78 by 0.6%.

The bottom line also improved 4.1% from the year-ago earnings, primarily owing to new rates and residential customer growth.

Total Revenues

The company recorded revenues of $625.3 million for the first quarter, which surpassed the Zacks Consensus Estimate of $544 million by 14.9%. The top line also improved 18.4% from the year-ago level.

Quarterly Highlights

Residential natural gas sales volume for the first quarter was 63 billion cubic feet (Bcf), up 14.1% year over year. Total volumes delivered were 146.9 Bcf, up 6.4% from the year-ago period due to improving commercial and industrial sales volume.

Total operating expenses for the reported quarter increased 7.2% from the year-ago figure to $180.9 million.

Operating income for the reported quarter decreased 2.2% year over year to $130.3 million.

For first-quarter 2021, ONE Gas’ customer base rose 1.08% 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 $109 million for the reported quarter compared with $123.4 million in the year-ago period. The decrease was due to a difference in the timing of capital projects between the two periods.

Financial Highlights

As of Mar 31, 2021, ONE Gas had cash and cash equivalents of $704.9 million compared with $8 million at 2020-end.

Long-term debt (excluding current maturities) was $4,082.7 million as of Mar 31, 2021 compared with $1,582.2 million at 2020-end.

Cash provided by (used in) operating activities during first-quarter 2021 was ($1659.3) million against $182.7 million in the first quarter of 2020.

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, higher than the current Zacks Consensus Estimate of $3.79 for the period.

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

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 7.45% due to these changes.

VGM Scores

At this time, ONE Gas has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 looks promising. It's no surprise ONE Gas has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.