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Why Is Oneok (OKE) Down 5.5% 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 lost about 5.5% 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 catalysts.

ONEOK Earnings and Revenues Surpass Estimates in Q1

ONEOK reported first-quarter 2019 operating earnings of 81 cents per share, which surpassed the Zacks Consensus Estimate of 73 cents by 10.96%.

The bottom line also improved 26.5% on a year-over-year basis.

Notably, NGL and natural gas volume growth in the Williston Basin, and NGL volume growth in the STACK and SCOOP areas as well as Permian Basin led to the uptick.

Total Revenues

Total revenues came in at $2.78 billion, outpacing the Zacks Consensus Estimate of $2.70 billion by 2.95%. However, the top line declined 10.3% from $3.10 billion registered in the prior-year quarter.

Quarterly Highlights

ONEOK spent $1.95 billion on cost of sales and fuel in the reported quarter, down 17.4% from the year-ago quarter’s tally.

The company’s adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $377.6 million, up 10.4% year over year.

The company incurred interest expenses of $115.4 million, down 0.3% from $115.7 million in the prior-year quarter. Operating income was $468.7 million in the first quarter, up 11.7% from $419.7 million recorded in the year-ago quarter.

Financial Highlights

As of Mar 31, 2019, ONEOK had cash and cash equivalents of $27.8 million compared with $12 million as of Dec 31, 2018.

Long-term debt (excluding current maturities) summed $10,004.3 million as of Mar 31, 2019, up from $8,873.3 million as of Dec 31, 2018.

The company’s cash flow from operating activities at the end of Mar 31, 2019, was $353.6 million, down from $495.3 million at the end of Dec 31, 2018.

Capital expenditures (less allowance for equity funds used during construction) amounted to $889.7 million in the first quarter, up from $264.5 million in the year-ago period.

How Have Estimates Been Moving Since Then?

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

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

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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