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ONE Gas (OGS)
NYSE:OGS
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ONE Gas
(NYSE:OGS)
75Outperform
Positive Factors
Customer Growth
Management continues to see solid customer growth within its service footprint, adding 23K new meters.
Strategic Initiatives
Management credited ongoing benefits from strategic initiatives, potentially driving OGS to outperform its O&M growth outlook.
Negative Factors
Interest Expense
Higher interest expense is expected due to maturing lower-cost debt, which impacts short-term earnings estimates.
ONE Gas (OGS) vs. S&P 500 (SPY)
Market Cap
$4.40B
Dividend Yield3.54%
Average Volume (3M)448.80K
Price to Earnings (P/E)19.1
Beta (1Y)0.41
Revenue Growth-12.16%
EPS Growth-5.73%
CountryUS
Employees3,900
SectorUtilities
Sector Strength84
IndustryRegulated Utilities
Share Statistics
EPS (TTM)3.91
Shares Outstanding59,877,552
10 Day Avg. Volume470,033
30 Day Avg. Volume448,801
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.15
Price to Cash Flow (P/CF)17.90
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$73.50Price Target Upside-0.04% Downside
Rating ConsensusHold
Number of Analyst Covering6
ONE Gas Business Overview & Revenue Model
Company DescriptionONE Gas, Inc. engages in the provision of natural gas distribution services. It also offers natural gas to residential, commercial, industrial, and transportation customers. The company was founded in 1906 and is headquartered in Tulsa, OK.
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, the 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 | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.08B | 2.37B | 2.58B | 1.81B | 1.53B | Gross Profit |
| 775.11M | 729.08M | 646.65M | 583.91M | 561.71M | EBIT |
| 399.04M | 377.59M | 349.96M | 310.26M | 303.52M | EBITDA |
| 703.17M | 666.90M | 574.25M | 514.28M | 493.33M | Net Income Common Stockholders |
| 222.85M | 231.23M | 221.74M | 206.43M | 196.41M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 57.99M | 18.84M | 9.68M | 8.85M | 7.99M | Total Assets |
| 8.43B | 7.77B | 7.78B | 8.40B | 6.03B | Total Debt |
| 3.33B | 3.07B | 2.93B | 4.18B | 2.00B | Net Debt |
| 3.27B | 3.03B | 2.92B | 4.17B | 1.99B | Total Liabilities |
| 5.32B | 5.01B | 5.19B | 6.05B | 3.80B | Stockholders Equity |
| 3.10B | 2.77B | 2.58B | 2.35B | 2.23B |
| Cash Flow | Free Cash Flow | |||
| -334.75M | 272.90M | 961.36M | -2.03B | -106.84M | Operating Cash Flow |
| 368.41M | 939.53M | 1.57B | -1.54B | 364.50M | Investing Cash Flow |
| -707.50M | -669.64M | -614.11M | -501.08M | -470.37M | Financing Cash Flow |
| 378.23M | -248.63M | -947.46M | 2.04B | 96.01M |
ONE Gas Technical Analysis
Positive
73.53
Price Trends
70.89
Positive
71.64
Positive
68.60
Positive
Market Momentum
0.99
Positive
53.07
Neutral
52.39
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OGS, the sentiment is Positive. The current price of 73.53 is above the 20-day moving average (MA) of 73.28, above the 50-day MA of 70.89, and above the 200-day MA of 68.60, indicating a bullish trend. The MACD of 0.99 indicates Positive momentum. The RSI at 53.07 is Neutral, neither overbought nor oversold. The STOCH value of 52.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $23.80B | 21.25 | 9.00% | 2.25% | 5.90% | 11.85% | |
76 Outperform | $6.98B | 12.98 | 12.22% | 4.62% | -14.01% | ― | |
75 Outperform | $4.40B | 19.14 | 7.59% | 3.54% | -12.16% | -5.73% | |
66 Neutral | $4.77B | 14.39 | 15.15% | 3.66% | 9.18% | 36.67% | |
65 Neutral | $5.23B | 26.32 | 5.84% | 3.41% | -5.92% | 29.47% | |
65 Neutral | $11.91B | 15.60 | 6.55% | 4.41% | 7.00% | 0.55% | |
64 Neutral | $44.81B | 15.73 | 9.55% | 3.57% | -18.00% | -7.54% |
* Utilities Sector Average
Performance Comparison
OGS
ONE Gas
73.53
12.81
21.10%
ATO
Atmos Energy
148.66
35.01
30.81%
NJR
New Jersey Resources
48.48
7.31
17.76%
SRE
Sempra Energy
68.79
0.01
0.01%
SWX
Southwest Gas
71.87
0.85
1.20%
UGI
UGI
32.38
8.35
34.75%
ONE Gas Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: 2.48% | Next Earnings Date: May 5, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted a strong performance in terms of exceeding EPS guidance, robust customer growth, and significant capital investments and system improvements. However, challenges such as a decline in net income, increased interest expenses, and weather-related operational impacts were also noted. Overall, the positives and strategic growth initiatives were significant, though tempered by financial and operational challenges.Highlights
Exceeded EPS Guidance
ONE Gas exceeded the midpoint of its elevated EPS guidance for 2024, achieving full-year earnings per diluted share of $3.91, marking the 11th consecutive year of meeting or exceeding the midpoint of year-ahead EPS guidance.
Robust Customer Growth
In 2024, ONE Gas set 23,000 new meters across its service territory, with growth occurring in every major metro area in Kansas, Oklahoma, and Texas.
Capital Investment and System Improvements
Completed over $750 million worth of capital investment projects in 2024, including a 50% reduction in leak-related emissions since 2005 and the completion of a major bare steel service line replacement program in Kansas.
Strong Financial Position
Maintained a strong balance sheet with S&P and Moody's affirming their credit ratings at A minus and A3, respectively, with stable outlooks.
Lowlights
Net Income Decline
GAAP net income for the full year was $223 million, a decrease from $231 million in 2023.
Increased Interest Expense
Interest expense in the quarter was $10.4 million higher year-over-year, primarily due to higher rates on long-term debt issuances and higher commercial paper balances.
Weather Impact on Operations
The fourth quarter was approximately 24% warmer than normal, impacting operations, although the impact on earnings was mitigated by weather normalization mechanisms.
Company Guidance
During the ONE Gas Fourth Quarter and Year-End 2024 Earnings Conference Call, the company provided financial guidance and metrics for 2025, projecting net income between $254 million and $261 million and earnings per diluted share ranging from $4.20 to $4.32. The capital expenditures and asset removal costs are anticipated to be approximately $750 million. For 2024, ONE Gas reported a GAAP net income of $223 million, or $3.91 per diluted share, surpassing the revised EPS guidance midpoint of $3.90. The company's authorized rate base as of year-end was approximately $5.4 billion, with an estimated average rate base for 2025 of about $5.8 billion. ONE Gas also highlighted its strong balance sheet, with S&P and Moody’s affirming their respective A minus and A3 credit ratings and stable outlooks. The company noted robust customer growth, setting 23,000 new meters in 2024, and is exploring opportunities to supply natural gas for power generation in various sectors.ONE Gas Corporate Events
Private Placements and FinancingDividendsBusiness Operations and StrategyFinancial Disclosures
ONE Gas Reports Strong Q4 2024 Financial Results
Positive
Feb 19, 2025
On February 19, 2025, ONE Gas reported its financial results for Q4 and full year 2024, showing strong performance with Q4 net income of $77.0 million and full-year net income of $222.9 million. Despite a slight decrease in annual net income compared to 2023, the company demonstrated effective fiscal management and strategic planning with increased earnings per share due to new rates and customer growth in Oklahoma and Texas. Additionally, ONE Gas completed significant equity transactions in December 2024, which generated $245.7 million in net proceeds. The company also announced a dividend increase for Q1 2025 and outlined plans for substantial capital investments in system integrity and service extensions.
Business Operations and Strategy
ONE Gas Announces Participation in Key Investor Conferences
Neutral
Feb 14, 2025
On February 14, 2025, ONE Gas announced its participation in several investor conferences, including the UBS Midwest Utilities Mini-Conference, Morgan Stanley Energy and Power Conference, and Jefferies Power, Utilities and Clean Energy Conference. Company executives will engage with the investment community, potentially impacting stakeholder relations and market perceptions.
Financial Disclosures
ONE Gas Announces 2024 Earnings Release Schedule
Neutral
Jan 23, 2025
On January 23, 2025, ONE Gas announced it will release its fourth-quarter and year-end 2024 financial results after the market closes on February 19, 2025. The company will host a conference call and webcast on February 20, 2025, to discuss these results. The schedule for subsequent quarterly earnings releases and conference calls throughout 2025 was also outlined, indicating the company’s commitment to transparency and regular communication with stakeholders.
DividendsBusiness Operations and Strategy
ONE Gas Announces Dividend Increase and Strategy
Positive
Jan 21, 2025
On January 21, 2025, ONE Gas announced an increase in its quarterly dividend by 1 cent, bringing it to 67 cents per share, payable on March 7, 2025, to shareholders recorded by February 21, 2025. This decision reflects the company’s financial strategy, aiming for an average annual dividend growth of 1% to 2% through 2029, with a target payout ratio of 55% to 65% of net income, indicating a stable financial outlook for stakeholders.
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.