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ONE Gas (OGS) to Gain From Investments & Regulated Operation
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ONE Gas, Inc’s (OGS - Free Report) ongoing capital expenditures for pipeline integrity and extension of services to new areas are likely to drive its performance. The company is expected to further benefit from 100% regulated operation and high percentage of residential customers. ONE Gas continues to increase shareholders’ value via regular dividend payments.
However, this Zacks Rank #3 (Hold) stock has to face risks related to the seasonality of its business and competition with other clean energy sources.
Tailwinds
During 2023-2027, ONE Gas aims to invest $3.6 billion to strengthen its operations. It expects a capital expenditure of $675 million in 2023. Nearly 70% of the amount will be directed toward system integrity and replacement projects.
This 100% regulated natural gas distribution utility has a high percentage of residential customers, providing stability and strong visibility of future earnings. More than 93% of OGS’ customers belong to the residential category. The company registered higher customer addition in 2022 and is expected to do the same in 2023.
Headwinds
The natural gas industry is highly competitive and OGS has to compete against a large number of competitors to retain customers and prove reliability of its services.
The sale of natural gas to residential and commercial customers is a seasonal business, as a substantial portion of their natural gas requirements are for heating. Also, a warmer-than-expected winter would have an adverse impact on the company’s profitability.
Atmos Energy’s long-term (three to five year) earnings growth rate is 7.5%. The Zacks Consensus Estimate for ATO’s fiscal 2023 earnings per share (EPS) indicates an increase of 7.7%.
NJR’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for NJR’s fiscal 2023 EPS implies an improvement of 5.6%.
NiSource’ long-term earnings growth rate is 6.9%. The Zacks Consensus Estimate for NI’s 2023 EPS indicates growth of 6.8%.
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ONE Gas (OGS) to Gain From Investments & Regulated Operation
ONE Gas, Inc’s (OGS - Free Report) ongoing capital expenditures for pipeline integrity and extension of services to new areas are likely to drive its performance. The company is expected to further benefit from 100% regulated operation and high percentage of residential customers. ONE Gas continues to increase shareholders’ value via regular dividend payments.
However, this Zacks Rank #3 (Hold) stock has to face risks related to the seasonality of its business and competition with other clean energy sources.
Tailwinds
During 2023-2027, ONE Gas aims to invest $3.6 billion to strengthen its operations. It expects a capital expenditure of $675 million in 2023. Nearly 70% of the amount will be directed toward system integrity and replacement projects.
This 100% regulated natural gas distribution utility has a high percentage of residential customers, providing stability and strong visibility of future earnings. More than 93% of OGS’ customers belong to the residential category. The company registered higher customer addition in 2022 and is expected to do the same in 2023.
Headwinds
The natural gas industry is highly competitive and OGS has to compete against a large number of competitors to retain customers and prove reliability of its services.
The sale of natural gas to residential and commercial customers is a seasonal business, as a substantial portion of their natural gas requirements are for heating. Also, a warmer-than-expected winter would have an adverse impact on the company’s profitability.
Stocks to Consider
Some better-ranked stocks from the same sector are Atmos Energy Corporation (ATO - Free Report) , NewJersey Resources (NJR - Free Report) and NiSource Inc. (NI - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Atmos Energy’s long-term (three to five year) earnings growth rate is 7.5%. The Zacks Consensus Estimate for ATO’s fiscal 2023 earnings per share (EPS) indicates an increase of 7.7%.
NJR’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for NJR’s fiscal 2023 EPS implies an improvement of 5.6%.
NiSource’ long-term earnings growth rate is 6.9%. The Zacks Consensus Estimate for NI’s 2023 EPS indicates growth of 6.8%.