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A month has gone by since the last earnings report for Oneok Inc. (OKE). Shares have added about 0.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Oneok 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 drivers.
ONEOK Beats on Q1 Earnings, Raises 2021 EPS Guidance
ONEOK posted first-quarter 2021 operating earnings of 86 cents per share, surpassing the Zacks Consensus Estimate of 79 cents by 8.9%. Also, the bottom line improved 3.6% year over year.
Total revenues of $3,194.7 million missed the Zacks Consensus Estimate of $3,526 million by 9.4%. However, the top line improved 3.5% from $2,136.7 million in the prior-year quarter.
Highlights of the Release
The company spent $2,121.5 million on cost of sales and fuel, up 66.1% from the year-ago quarter’s level.
In the first quarter, ONEOK’s adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $866.4 million, up 23.6% year over year.
The company incurred interest expenses worth $185.5 million, up 31.9% from the prior-year quarter.
Its operating income came in at $664.7 million in the first quarter against the prior-year quarter’s loss of $83.5 million.
As of Mar 31, 2021 ONEOK had cash and cash equivalents worth $402.4 million compared with $524.5 million as of Dec 31, 2020.
Long-term debt (excluding current maturities) was $13,638.8 million as of Mar 31, 2021, down from $14,228.4 million as of Dec 31, 2020.
The company’s cash provided by operating activities in the first three months of 2021 was $533.3 million, up from $422.7 million in the comparable period last year.
Capital expenditures (less allowance for equity funds used during construction) amounted to $176.7 million in the first three months of 2021, down from $949.7 million in the corresponding quarter of last year.
ONEOK raised its 2021 net income guidance from $1,075-$1,375 million to $1,200-$1,500 million. Also, the same for adjusted EBITDA was lifted from $2,900-$3,200 million to $3,050-$3,350 million. Also, it enhanced its earnings per share expectation to $2.69-$3.35 from $2.40-$3.08. Growth capital expenditures are likely to be $335-$465 million in 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
Currently, Oneok has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Oneok has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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