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Oneok (OKE) Down 2.1% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Oneok Inc. (OKE - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the S&P 500.

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

ONEOK Q2 Earnings Beat Estimates, Revenues Miss

ONEOK posted second-quarter 2018 operating earnings of 68 cents per share, beating the Zacks Consensus Estimate of 67 cents by 1.5%. The figure surged 106% on a year-over-year basis.

The upside can be attributed to increase in volume growth of natural gas and natural gas liquids in the STACK and SCOOP areas along with higher optimization and marketing activities in the Natural Gas Liquids segment.

Total Revenues

Total revenues were $2,960.5 million, which missed the Zacks Consensus Estimate of $3,203 million by 7.6%. Revenues jumped 8.6% from $2,725.8 million in the prior-year quarter.

Quarterly Highlights

The company spent $2,175.8 million on cost of sales and fuel, which increased 4% from the year-ago quarter’s tally.

In the second quarter, ONEOK’s adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $352.1 million, up 29% year over year.

The company incurred interest expenses of $113.5 million, down 4.2% from $118.5 million in the prior-year quarter. Operating income was $448.4 million in the second quarter, up 40.4% year over year.

Financial Highlights

As of Jun 30, 2018, ONEOK had cash and cash equivalents of $15.3 million compared with $37.2 million as of Dec 31, 2017.

Long-term debt (excluding current maturities) was $7,091.2 million as of Jun 30, 2018, down from $8,091.6 million as of Dec 31, 2017.

The company’s cash flow from operating activities at the end of Jun 30, 2018 was $1,003 million, up from $642.9 million at the end of Jun 30, 2017.

Capital expenditures (less allowance for equity funds used during construction) amounted to $615.3 million, up from $195.2 million in the year-ago period.

Guidance

For 2018, ONEOK raised net income guidance midpoint to $1,085 million from $1,055 million. The company also hiked adjusted EBITDA guidance midpoint to $2,350 million from $2,315 million.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Oneok has a strong Growth Score of A, a grade with the same score on the momentum front. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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




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