ONE Gas, Inc. (NYSE:OGS) came out with its second-quarter results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. ONE Gas reported US$273m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.48 beat expectations, being 3.0% higher than what the analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for ONE Gas from seven analysts is for revenues of US$1.56b in 2020 which, if met, would be an okay 4.0% increase on its sales over the past 12 months. Statutory per share are forecast to be US$3.55, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$1.56b and earnings per share (EPS) of US$3.54 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$81.89. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on ONE Gas, with the most bullish analyst valuing it at US$92.00 and the most bearish at US$68.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ONE Gas' past performance and to peers in the same industry. The analysts are definitely expecting ONE Gas' growth to accelerate, with the forecast 4.0% growth ranking favourably alongside historical growth of 1.5% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 5.2% per year. So it's clear that despite the acceleration in growth, ONE Gas is expected to grow meaningfully slower than the industry average.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that ONE Gas' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$81.89, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for ONE Gas going out to 2024, and you can see them free on our platform here.
Before you take the next step you should know about the 2 warning signs for ONE Gas (1 makes us a bit uncomfortable!) that we have uncovered.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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