It has been about a month since the last earnings report for Oneok Inc. (OKE Quick QuoteOKE - Free Report) . Shares have added about 4.4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Oneok 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 drivers.

ONEOK Q3 Earnings Beat Estimates, Stock Down 2.4%

ONEOK Inc. reported third-quarter 2023 operating earnings per share (EPS) of 99 cents, which beat the Zacks Consensus Estimate of 98 cents by 1.02%. The bottom line also improved 3% from the year-ago quarter’s figure of 96 cents.

Total Revenues

Operating revenues for the quarter totaled $4,189 million, which missed the Zacks Consensus Estimate of $4,959 million by 15.5%. The top line also declined 29.2% from $5,914 million in the prior-year quarter.

This top-line deterioration impacted the price performance of the stock, which has fallen 2.4% since the earnings release on Oct 31.

Highlights of the Release

Adjusted EBITDA came in at $1,001 million, up 11% year over year. In September 2023, ONEOK completed the acquisition of Magellan Midstream Partners. Adjusted EBITDA of $40 million included six days of operations subsequent to the closing of the Magellan acquisition.

Operating income totaled $739 million, up 5.6% from the prior-year quarter’s level of $700 million.

ONEOK incurred interest expenses of $215 million, up 28.7% from $167 million recorded in the year-ago period.

Total natural gas processed was 3,085 Billion British thermal units per day (BBtu/d), up 12.5% year over year. The Zacks Consensus Estimate for the same was pegged at 3,028 BBtu/d.

The company reported natural gas transportation capacity contracted of 7,704 million British thermal units per hour per day (MDth/d), up 5.3% year over year. The Zacks Consensus Estimate for the same was pegged at 7,479 MDth/d.

Financial Highlights

As of Sep 30, 2023, the company had cash and cash equivalents worth $284 million compared with $220 million as of Dec 31, 2022.

Long-term debt (excluding current maturities) totaled $21.5 billion as of Sep 30, 2023, compared with $12.7 billion as of Dec 31, 2022.

Cash provided by operating activities for the first nine months of 2023 amounted to $2.9 billion compared with $1.9 billion in the corresponding period of 2022.

2023 Guidance

ONEOK provided financial guidance on a consolidated basis, including the acquisition of Magellan Midstream Partners.

The company anticipates consolidated 2023 net income in the band of $2,550-$2,650 million. It expects adjusted EBITDA in the range of $5,050-$5,150 million.

 

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 -8.5% due to these changes.

VGM Scores

At this time, Oneok has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 these revisions indicates a downward shift. Notably, Oneok has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.