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Why Is ONE Gas (OGS) Up 3.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for ONE Gas (OGS - Free Report) . Shares have added about 3.8% 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 drivers.

ONE Gas Q4 Earnings In Line, Revenues Lag Estimates

ONE Gas, Inc.  reported fourth-quarter 2023 operating earnings per share (EPS) of $1.27 per share, which is on par with the Zacks Consensus Estimate. The bottom line increased 3.2% from the year-ago quarter’s figure of $1.23.

OGS reported 2023 earnings of $4.14 per share compared with $4.08 in 2022, indicating a year-over-year increase of 1.4%.

Total Revenues

ONE Gas recorded revenues of $605.9 million, which missed the Zacks Consensus Estimate of $815.6 million by 25.7%. The top line also decreased 25.9% from $818.2 million reported in the prior-year period.

OGS reported total revenues of nearly $2.4 billion in 2023 compared with $2.6 billion in 2022, implying a year-over-year decrease of 8.1%.

Highlights of the Release

Total natural gas volumes delivered in the reported quarter were 109.7 billion cubic feet (bcf), down 5.9% from the year-ago quarter’s level. ONE Gas served 2,263,000 customers during the reported quarter, up 0.8% year over year.

Total operating expenses were $231.2 million, up 10.1% from that recorded in the comparable period of 2022. This increase was due to a rise in Operations and maintenance (O&M) and depreciation and amortization expenses.

Operating income increased 3.4% year over year to $107.1 million.

ONE Gas incurred net interest expenses of $29.8 million, up 14.5% from the year-ago quarter’s level.

Financial Highlights

As of Dec 31, 2023, OGS had cash and cash equivalents of $18.8 million compared with $9.7 million as of Dec 31, 2022.

Long-term debt (excluding current maturities) was $1.88 billion as of Dec 31, 2023, compared with $2.35 billion as of Dec 31, 2022.

In 2023, cash provided by operating activities was $0.94 billion compared with $1.57 billion in the year-ago period.

2024 Guidance

ONE Gas expects 2024 earnings per share in the range of $3.70-$4. The Zacks Consensus Estimate for earnings is pegged at $3.87 per share, higher than the mid-point of the company’s guided range.

The company's 2024 earnings guidance includes the benefit of new rates and customer growth, offset by higher operating expenses, including employee-related and contractor costs, depreciation expense from capital investments and interest expense due to higher interest rates. It also assumes normal weather conditions.

OGS continues to expect capital expenditures, including asset removal costs, of approximately $750 million in 2024. The company aims to invest $4.25 billion over the next five years to further strengthen its operations.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, ONE Gas has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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

ONE Gas has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

ONE Gas is part of the Zacks Utility - Gas Distribution industry. Over the past month, MDU Resources (MDU - Free Report) , a stock from the same industry, has gained 9.9%. The company reported its results for the quarter ended December 2023 more than a month ago.

MDU Resources Group reported revenues of $1.14 billion in the last reported quarter, representing a year-over-year change of -38.9%. EPS of $0.48 for the same period compares with $0.61 a year ago.


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