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Should You Be Concerned About ONE Gas, Inc.'s (NYSE:OGS) Earnings Growth?

Simply Wall St

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For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on ONE Gas, Inc. (NYSE:OGS) useful as an attempt to give more color around how ONE Gas is currently performing.

See our latest analysis for ONE Gas

Did OGS perform better than its track record and industry?

OGS's trailing twelve-month earnings (from 31 March 2019) of US$175m has declined by -1.3% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 13%, indicating the rate at which OGS is growing has slowed down. Why could this be happening? Let's examine what's occurring with margins and whether the rest of the industry is experiencing the hit as well.

NYSE:OGS Income Statement, June 17th 2019

In terms of returns from investment, ONE Gas has fallen short of achieving a 20% return on equity (ROE), recording 8.3% instead. Furthermore, its return on assets (ROA) of 4.2% is below the US Gas Utilities industry of 4.5%, indicating ONE Gas's are utilized less efficiently. However, its return on capital (ROC), which also accounts for ONE Gas’s debt level, has increased over the past 3 years from 5.6% to 5.7%.

What does this mean?

Though ONE Gas's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I recommend you continue to research ONE Gas to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for OGS’s future growth? Take a look at our free research report of analyst consensus for OGS’s outlook.
  2. Financial Health: Are OGS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.