U.S. markets closed
  • S&P 500

    -23.89 (-0.54%)
  • Dow 30

    -149.06 (-0.42%)
  • Nasdaq

    -105.59 (-0.71%)
  • Russell 2000

    -13.78 (-0.62%)
  • Crude Oil

    +0.17 (+0.23%)
  • Gold

    -19.30 (-1.05%)
  • Silver

    -0.26 (-1.02%)

    -0.0030 (-0.25%)
  • 10-Yr Bond

    -0.0300 (-2.36%)

    -0.0061 (-0.44%)

    +0.2690 (+0.25%)

    +419.09 (+1.05%)
  • CMC Crypto 200

    +1.37 (+0.14%)
  • FTSE 100

    -46.12 (-0.65%)
  • Nikkei 225

    -498.83 (-1.80%)

ONEOK's (OKE) Expansion Efforts & Fee-Based Earnings Bode Well

·3 min read

ONEOK, Inc. OKE is well-poised to benefit from the ONEOK Partners’ strategic acquisition, increased fee-based earnings and midstream assets located in higher productive regions.

The Zacks Consensus Estimate for the company’s 2021 earnings is pegged at $3.08 per share, suggesting year-over-year growth of 116.9%. The consensus mark for revenues is pegged at $11.6 billion that indicates year-over-year increase of 35.9%. The long-term (three to five years) earnings growth rate of ONEOK is 22.33%.

What’s Aiding the Stock?

ONEOK is well-placed to gain from long-term fee-based commitments to its Natural Gas Gathering and Processing, and Natural Gas Liquids segments. The company reported more than 90% of its 2020 earnings as fee-based.

It continues to invest in organic growth projects for expansion in the existing operating regions and also provides a broad range of services to crude oil and natural gas producers as well as the end-use markets. Amid this unprecedented economic crisis due to the pandemic, the company undertook initiatives to preserve liquidity. Moreover, ONEOK Partners is the primary growth vehicle of ONEOK and the completion of this buyout is likely to be accretive to its distributable cash flow from 2017 through 2021.


However, stringent government regulations and intense competition in the pipeline business are potential growth deterrents. Also, persistently rising long-term debt is a concern to the company.

Zacks Rank & Price Performance

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past six months, shares of the company have rallied 98.2% compared with the industry’s 22.6% rise.

Stocks to Consider

Some other better-ranked utilities are MDU Resources Group, Inc. MDU, NewJersey Resources Corporation NJR and Portland General Electric Company POR, all carrying a Zacks Rank#2 (Buy).

MDU Resources’ Zacks Consensus Estimate for 2021 earnings has been revised 5.1% upward in the past 60 days. It has a long-term (three to five years) earnings growth rate of 5%.

NewJersey Resources has a long-term earnings growth rate of 6%. The Zacks Consensus Estimate for fiscal 2021 earnings has been revised 8.1% upward in the past 60 days.

Portland General Electric delivered a trailing four-quarter earnings surprise of 107%, on average. The company has a long-term earnings growth rate of 13.4%.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ONEOK, Inc. (OKE) : Free Stock Analysis Report

Portland General Electric Company (POR) : Free Stock Analysis Report

MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report

NewJersey Resources Corporation (NJR) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research