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ONE Gas (OGS) Down 2.2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for ONE Gas (OGS - Free Report) . Shares have lost about 2.2% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is ONE Gas due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

ONE Gas Beats on Q2 Earnings, Raises 2019 Guidance

ONE Gas, Inc.  recorded second-quarter 2019 operating earnings of 46 cents per share, beating the Zacks Consensus Estimate of 41 cents by 12.2%.

Moreover, the reported earnings improved 17.9% year over year driven by new rates, and marginally lower operation and maintenance expenses.

Total Revenues

The company reported total revenues of $290.6 million in the second quarter, lagging the Zacks Consensus Estimate of $294 million by nearly 1.15% and declining from the prior-year figure of $292.5 million by 0.7%.

Quarterly Highlights

Total operating expenses in the reported quarter increased 2.4% from the year-ago period to $161.1 million.

Operating income in the reported quarter increased 14.1% year over year to $46.9 million.

The company incurred interest expenses of $15.4 million, increasing 28.3% from the year-ago period.

Financial Highlights

On Jun 30, 2019, ONE Gas had cash and cash equivalents of $11.1 million compared with $21.3 million at 2018-end.

Long-term debt (excluding current maturities) was $1,285.8 million as of Jun 30, 2019, increasing marginally from the Dec 31, 2018 level of $1,285.5 million.

The company’s cash flow from operating activities in the first half of 2019 was $241.1 million compared with $399.9 million in the prior-year period.

Guidance

ONE Gas upwardly revised its guidance for 2019 net income to the range of $180-$190 million from $174-$190 million. Earnings per share guidance was revised upward to the band of $3.39-$3.57 from $3.27-$3.57 per share. The midpoint of management’s 2019 EPS guidance is $3.48, higher than the current Zacks Consensus Estimate of $3.45 for the period.

The company reiterated its 2019 capital expenditure view of $450 million. Out of the projected expenditure, 70% is directed toward system integrity and replacement projects.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, ONE Gas has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. 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 B. 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.


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