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Why Oneok (OKE) Is Down Today

Stocks in this article: OKE OGS

NEW YORK (TheStreet) -- Oneok (OKE) was falling 1.8% to $58.89 Monday after the company announced it has completed the spin off of its natural gas distribution.

The new company, called One Gas (OGS), includes the Kansas Gas Service, Oklahoma Natural Gas, and Texas Gas Service. Current Oneok shareholders will receive one share of the new publicly traded company for every four shares of Oneok they possess. The company won't give out fractional shares, and shareholders who are entitled to fractional shares will receive the cash value instead.

Shares of One Gass were falling 1.8% to $33.50.

TheStreet Ratings team rates ONEOK INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ONEOK INC (OKE) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • OKE's revenue growth has slightly outpaced the industry average of 15.0%. Since the same quarter one year prior, revenues rose by 17.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 111.58% to $233.27 million when compared to the same quarter last year. In addition, ONEOK INC has also vastly surpassed the industry average cash flow growth rate of 55.48%.
  • Compared to its closing price of one year ago, OKE's share price has jumped by 43.04%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • ONEOK INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ONEOK INC reported lower earnings of $1.65 versus $1.67 in the prior year. This year, the market expects an improvement in earnings ($1.79 versus $1.65).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Gas Utilities industry and the overall market on the basis of return on equity, ONEOK INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • You can view the full analysis from the report here: OKE Ratings Report

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