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ONE Gas (OGS) Up 4.9% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for ONE Gas (OGS). Shares have added about 4.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is ONE Gas due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

ONE Gas Q1 Earnings Miss Estimates, Revenues Beat

ONE Gas Inc. reported first-quarter 2022 operating earnings per share (EPS) of $1.83, which missed the Zacks Consensus Estimate of $1.95 by 6.2%.

However, the bottom line improved by 2.2% from the year-ago earnings of $1.79 per share, primarily due to contributions from the new rates, demand from an expanding residential customer base and a fall in bad debt expenses.

Total Revenues

ONE Gas recorded revenues of $971.5 million in the first quarter, which surpassed the Zacks Consensus Estimate of $642 million by 51.3%. The top line also improved by 55.4% from the year-ago level.

Highlights of the Release

Total natural gas volumes delivered in the first quarter were 148.2billion cubic feet, up 0.9% from the year-ago level due to an improving transportation sales volume and the commercial and industrial sales volumes.

Total operating expenses in the reported quarter increased 5.5% from the year-ago figure to $190.8 million.

The operating income in the reported quarter increased 8.1% year over year to $140.8 million.

ONE Gas incurred net interest expenses of $15.6 million, up 1.3%.

Financial Highlights

As of Mar 31, 2022, OGS had cash and cash equivalents of $12.4 million compared with $8.9 million as of Dec 31, 2021.

Long-term debt (excluding current maturities) was $2,283.6 million as of Mar 31, 2022, compared with $3,683.4 million as of Dec 31, 2021.

Cash provided by (used in) the operating activities for the first three months of 2022 was $107.6 million compared with $1,659.3 million in year-ago quarter.

Guidance

ONE Gas affirmed the 2022 net income in the range of $215-$227 million and EPS in the band of $3.96-$4.20. The midpoint of the earnings guidance is $4.08, lower than the Zacks Consensus Estimate of $4.10 per share.

Capital expenditure is expected at $650 million for 2022.

The board of directors declared a second-quarter dividend of 62 cents per share or $2.48 per share on an annualized basis, up 6.9% from the year-ago quarter, payable on Jun 1, 2022 to shareholders of record at the close of the business on May 16, 2022.

 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, ONE Gas has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, ONE Gas has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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