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Why Is Oneok (OKE) Up 7.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for Oneok Inc. (OKE - Free Report) . Shares have added about 7.8% in that time frame, outperforming the S&P 500.

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

ONEOK Lags Q4 Earnings, Surpasses Revenue Estimates

ONEOK posted fourth-quarter 2018 operating earnings of 70 cents per share, which missed the Zacks Consensus Estimate of 74 cents by 5.4%. Nevertheless, the figure improved 337.5% on a year-over-year basis.

In 2018, the company delivered earnings of $2.78 per share compared with $1.29 per share in 2017. The upside can be attributed to volume growth across operations.

Total Revenues

Total revenues were $3.14 billion, which beat the Zacks Consensus Estimate of $3.09 billion by 1.6%. The figure declined 17.3% from $3.79 billion in the prior-year quarter.

In 2018, the company delivered revenues of $12.59 billion, up from $12.17 billion in 2017.

Quarterly Highlights

The company spent $2.32 billion on cost of sales and fuel, down 24.6% from the year-ago quarter’s tally.

In the fourth quarter, ONEOK’s adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $347.4 million, up 12.3% year over year.

The company incurred interest expenses of $118.5 million, down 4.6% from $124.2 million in the prior-year quarter. Operating income was $471.8 million in the fourth quarter, up from $400.5 million in the prior-year quarter.

Recently, ONEOK completed capital-growth project worth approximately $500 million.

Financial Highlights

As of Dec 31, 2018, ONEOK had cash and cash equivalents of $12 million compared with $37.2 million as of Dec 31, 2017.

Long-term debt (excluding current maturities) was $8,873.3 million as of Dec 31, 2018, up from $8,091.6 million as of Dec 31, 2017.

The company’s cash flow from operating activities at the end of Dec 31, 2018 was $2,186.7 million, up from $1,315.4 million at the end of Dec 31, 2017.

Capital expenditures (less allowance for equity funds used during construction) amounted to $2,141.4 million, up from $567.6 million in the year-ago period.

Guidance

For 2019, ONEOK projects net income in the range of $1,140-$1,400 million. Also, the company expects 2019 adjusted EBITDA in the range of $2,500-$2,700 million.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Oneok has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Oneok has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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