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ONE Gas (OGS)
NYSE:OGS
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ONE Gas
(NYSE:OGS)
Rating:69Neutral
Price Target:
$82.00
▲( 9.64% Upside)
Positive Factors
Customer Growth
Management continues to see solid customer growth within its service footprint, adding 23K new meters.
Earnings Growth
OGS has been upgraded to Buy due to its defensive characteristics and potential upside from Federal Reserve rate cuts and economic slowdown.
Financing Strategy
OGS has a unique financing strategy which effectively has an arbitrage on in the ST vs LT yield curve.
Negative Factors
Interest Expense
Higher interest expense is expected due to maturing lower-cost debt, which impacts short-term earnings estimates.
Investor Sentiment
Despite the positive outlook, OGS has had little traction with investors and is currently a Consensus Hold on the sell-side.
Valuation Concerns
Shares already trading near fair value estimate, leading to a hold recommendation.
ONE Gas (OGS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.54B
Dividend Yield3.5%
Average Volume (3M)659.88K
Price to Earnings (P/E)18.3
Beta (1Y)0.25
Revenue Growth7.73%
EPS Growth2.36%
CountryUS
Employees3,900
SectorUtilities
Sector Strength83
IndustryRegulated Gas
Share Statistics
EPS (TTM)1.98
Shares Outstanding59,930,626
10 Day Avg. Volume988,155
30 Day Avg. Volume659,875
Financial Highlights & Ratios
PEG Ratio-0.40
Price to Book (P/B)1.38
Price to Sales (P/S)0.00
P/FCF Ratio-28.56
Enterprise Value/Market Cap1.20
Enterprise Value/Revenue0.64
Enterprise Value/Gross Profit5.28
Enterprise Value/Ebitda1.99
Forecast
1Y Price Target
$78.86Price Target Upside5.44% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
ONE Gas Business Overview & Revenue Model
Company DescriptionONE Gas, Inc., together with its subsidiaries, operates as a regulated natural gas distribution utility company in the United States. The company operates through three divisions: Oklahoma Natural Gas, Kansas Gas Service, and Texas Gas Service. It provides natural gas distribution services to 2.2 million customers in three states. It serves residential, commercial, and transportation customers. As of December 31, 2021, it operated approximately 41,600 miles of distribution mains; and 2,400 miles of transmission pipelines, as well as had 51.4 billion cubic feet of natural gas storage capacity. ONE Gas, Inc. was founded in 1906 and is headquartered in Tulsa, Oklahoma.
How the Company Makes MoneyONE Gas generates revenue primarily through the distribution of natural gas to its customers in Kansas, Oklahoma, and Texas. The company earns money by charging customers for the natural gas consumed based on a regulated rate structure approved by state regulatory commissions. These rates are designed to cover the costs of purchasing natural gas, operating the distribution network, and earning a reasonable return on investment. Revenue streams include residential, commercial, and industrial sales, with residential customers typically generating the largest portion of revenue. Additionally, ONE Gas may engage in infrastructure investments and initiatives to enhance operational efficiency and reliability, which can lead to long-term financial benefits. The company's financial performance is also influenced by regulatory outcomes, weather conditions, and natural gas market dynamics.
ONE Gas Financial Statement Overview
Summary
ONE Gas presents a stable financial scenario with strong profitability and operational efficiency, as reflected by solid margins and efficient cash conversion. However, declining revenue and negative free cash flow indicate areas requiring strategic focus to bolster growth and liquidity. The company maintains a robust balance sheet with low leverage, enhancing its ability to weather financial fluctuations.Income Statement
ONE Gas shows stable gross and net profit margins in the TTM with a Gross Profit Margin of 37.0% and a Net Profit Margin of 10.7%. However, the company experienced a revenue decline of 12.1% from the previous year, indicating a need to address revenue generation. EBIT and EBITDA margins remain healthy at 19.1% and 33.6%, respectively, suggesting good operational efficiency.75
Positive
Balance Sheet
The balance sheet is strong with a Debt-to-Equity Ratio of 0.29 in the TTM, reflecting a low leverage position. The Equity Ratio of 36.8% indicates a robust capital structure. Return on Equity (ROE) is solid at 7.2%, showcasing good returns for shareholders. Overall, the balance sheet exhibits financial stability with low risk.80
Positive
Cash Flow
Cash flow analysis reveals challenges with a negative Free Cash Flow of -$330.99 million in the TTM, signaling cash outflows exceeding inflows. The Operating Cash Flow to Net Income Ratio is commendable at 1.65, indicating effective cash conversion from operations. However, the negative Free Cash Flow to Net Income Ratio highlights potential liquidity concerns.65
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.26B | 2.08B | 2.37B | 2.58B | 1.81B | 1.53B | Gross Profit |
| 1.03B | 775.11M | 729.08M | 646.65M | 583.91M | 561.71M | EBIT |
| 433.68M | 399.04M | 377.59M | 349.96M | 310.26M | 303.52M | EBITDA |
| 668.27M | 703.17M | 666.90M | 574.25M | 514.28M | 493.33M | Net Income Common Stockholders |
| 242.95M | 222.85M | 231.23M | 221.74M | 206.43M | 196.41M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 21.47M | 57.99M | 18.84M | 9.68M | 8.85M | 7.99M | Total Assets |
| 7.76B | 8.43B | 7.77B | 7.78B | 8.40B | 6.03B | Total Debt |
| 3.13B | 3.33B | 3.07B | 2.93B | 4.18B | 2.00B | Net Debt |
| 3.11B | 3.27B | 3.03B | 2.92B | 4.17B | 1.99B | Total Liabilities |
| 4.93B | 5.32B | 5.01B | 5.19B | 6.05B | 3.80B | Stockholders Equity |
| 2.83B | 3.10B | 2.77B | 2.58B | 2.35B | 2.23B |
| Cash Flow | Free Cash Flow | ||||
| -161.64M | -334.75M | 272.90M | 961.36M | -2.03B | -106.84M | Operating Cash Flow |
| 537.61M | 368.41M | 939.53M | 1.57B | -1.54B | 364.50M | Investing Cash Flow |
| -709.36M | -707.50M | -669.64M | -614.11M | -501.08M | -470.37M | Financing Cash Flow |
| 178.47M | 378.23M | -248.63M | -947.46M | 2.04B | 96.01M |
ONE Gas Technical Analysis
Neutral
74.79
Price Trends
75.07
Negative
72.66
Positive
71.36
Positive
Market Momentum
-0.25
Positive
47.22
Neutral
46.85
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OGS, the sentiment is Neutral. The current price of 74.79 is below the 20-day moving average (MA) of 76.44, below the 50-day MA of 75.07, and above the 200-day MA of 71.36, indicating a neutral trend. The MACD of -0.25 indicates Positive momentum. The RSI at 47.22 is Neutral, neither overbought nor oversold. The STOCH value of 46.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for OGS.
ONE Gas Risk Analysis
ONE Gas disclosed 15 risk factors in its most recent earnings report. ONE Gas reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
ONE Gas Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $4.43B | 18.54 | 7.30% | 4.10% | -7.10% | 2.54% | |
71 Outperform | $4.69B | 11.33 | 17.83% | 3.79% | 20.30% | 63.69% | |
71 Outperform | $1.67B | 16.49 | 7.36% | 4.71% | 3.88% | 11.80% | |
69 Neutral | $4.54B | 18.29 | 8.08% | 3.50% | 7.73% | 2.36% | |
67 Neutral | $2.91B | 23.12 | 9.04% | 2.05% | 20.41% | 13.64% | |
63 Neutral | $8.63B | 10.24 | 4.67% | 4.35% | 3.78% | -12.74% | |
61 Neutral | $5.13B | 22.88 | 6.49% | 3.49% | -10.78% | 16.27% |
* Utilities Sector Average
Performance Comparison
OGS
ONE Gas
74.79
14.32
23.68%
CPK
Chesapeake Utilities
122.31
14.48
13.43%
SR
Spire
74.24
15.00
25.32%
NJR
New Jersey Resources
46.05
3.94
9.36%
NWN
Northwest Gas
40.95
4.74
13.09%
SWX
Southwest Gas
69.06
-5.85
-7.81%
ONE Gas Earnings Call Summary
Earnings Call Date:May 05, 2025
(Q1-2025)
| % Change Since: -3.56%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance driven by new rates, customer growth, and operational excellence, including a significant safety award and regulatory successes. However, there were challenges such as increased O&M expenses, decreased other income, and higher interest expenses. The positive aspects slightly outweigh the negatives, showing a generally robust quarter.Q1-2025 Updates
Positive Updates
Strong Financial Performance
Reported net income of $119 million or $1.98 per diluted share, compared to $99.3 million or $1.75 in the same period last year.
Revenue and Customer Growth
First quarter revenues increased by approximately $52 million from new rates and $2 million from continued customer growth.
Operational Excellence and Safety Recognition
Received the American Gas Association Safety Award for the lowest rate of significant injuries among peers for the eighth consecutive year.
Successful Regulatory Filings
Filed performance-based rate change applications and completed annual capital recovery filings in several regions.
Innovative Projects and Emission Reductions
Progressed on the Austin System Reinforcement Project and achieved a 51% reduction in leak-related emissions.
Negative Updates
Increased O&M Expenses
First quarter O&M expenses were approximately 2% higher than the first quarter last year, with a projected 4% CAGR over the five-year plan.
Decreased Other Income
Other income net decreased by just under $3 million compared to the same period last year, primarily due to decreases in the market value of investments.
Higher Interest Expenses
Interest expense in the first quarter was $4.7 million higher than the same period in 2024, reflecting the maturity of lower coupon notes and higher average commercial paper balances.
Company Guidance
In the recent ONE Gas First Quarter Earnings Conference Call, the company reported strong financial results, with a net income of $119 million, or $1.98 per diluted share, driven by new rates and efficient management of O&M expenses. The company anticipates reaching the upper half of its guidance ranges, with net income projected between $254 million to $261 million and earnings per diluted share from $4.20 to $4.32. Weather conditions were 5% colder than normal, contributing to a 16% increase in customer demand compared to the previous year. Revenues increased by approximately $52 million from new rates and $2 million from customer growth, while O&M expenses rose by 2% compared to the first quarter of the previous year. The company maintained a 4% CAGR for O&M expenses across its five-year plan. Notably, ONE Gas has made progress on its emissions goals, achieving a 51% reduction in leak-related emissions and continuing to support customer growth with strategic capital investments.ONE Gas Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
ONE Gas Enters Forward Sale Agreement with JPMorgan
Positive
May 12, 2025
On May 8, 2025, ONE Gas, Inc. entered into a forward sale agreement with JPMorgan Chase Bank for 2,500,000 shares of its common stock, with settlement expected by December 31, 2026. Additionally, the company signed an underwriting agreement with J.P. Morgan Securities LLC for a public offering of the same number of shares, with an option for an additional 375,000 shares, marking a strategic move to enhance its financial flexibility and market presence.
The most recent analyst rating on (OGS) stock is a Buy with a $80.00 price target. To see the full list of analyst forecasts on ONE Gas stock, see the OGS Stock Forecast page.
Private Placements and FinancingBusiness Operations and Strategy
ONE Gas Announces Public Offering of Common Stock
Neutral
May 8, 2025
On May 8, 2025, ONE Gas, Inc. announced its plan to conduct a public offering of 2,500,000 shares of its common stock. The company intends to enter into a forward sale agreement with JPMorgan Chase Bank and grant an option to purchase an additional 375,000 shares. This move is expected to provide financial flexibility for general corporate purposes, including debt repayment and investments, potentially impacting its market positioning and stakeholder interests.
DividendsBusiness Operations and StrategyFinancial DisclosuresRegulatory Filings and Compliance
ONE Gas Reports Strong Q1 2025 Financial Results
Positive
May 5, 2025
On May 5, 2025, ONE Gas announced its first quarter financial results, reporting a net income of $119.4 million, an increase from the previous year. The company expects to achieve the upper half of its 2025 financial guidance and declared a quarterly dividend of 67 cents per share, payable on June 3, 2025. Despite colder weather, the impact on income was mitigated by regulatory mechanisms. The company also highlighted ongoing regulatory activities, including rate increase requests in Kansas, Oklahoma, and Texas, and plans for significant capital investments in system integrity and expansion projects.
Business Operations and Strategy
ONE Gas to Attend AGA Financial Forum
Neutral
Apr 17, 2025
On April 17, 2025, ONE Gas announced its participation in the American Gas Association Financial Forum scheduled for May 18-20, 2025, in Marco Island, Florida. Key executives will engage with the investment community, and the materials from the conference will be available on the company’s website. This participation underscores ONE Gas’s commitment to maintaining transparency and engagement with investors, potentially enhancing its market presence and stakeholder relations.
Financial Disclosures
ONE Gas to Announce Q1 2025 Financial Results
Neutral
Apr 8, 2025
On April 8, 2025, ONE Gas announced it will release its first quarter 2025 financial results on May 5, 2025, after market close, followed by a conference call on May 6, 2025. The call will be accessible via the company’s website, providing stakeholders an opportunity to engage with the executive management team regarding the company’s performance and future outlook.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.