How Smart Investors Look at ONEOK (OKE).

ONEOK logged a -0.3% change during today's evening session, and is now trading at a price of $66.99 per share.

Over the last year, ONEOK logged a 5.0% change, with its stock price reaching a high of $71.57 and a low of $55.91. Over the same period, the stock underperformed the S&P 500 index by -11.0%. As of April 2023, the company's 50-day average price was $65.99. ONEOK, Inc., together with its subsidiaries, engages in gathering, processing, fractionation, storage, transportation, and marketing of natural gas and natural gas liquids (NGL) in the United States. Based in Tulsa, OK, the large-cap Utilities company has 2,966 full time employees. ONEOK has offered a 5.7% dividend yield over the last 12 months.

The Business Has Weak Operating Margins:

2018 2019 2020 2021 2022 2023
Revenue (MM) $12,593 $10,164 $8,542 $16,540 $22,387 $19,199
Operating Margins 15% 19% 16% 16% 13% 19%
Net Margins 12% 16% 9% 9% 8% 15%
Net Income (MM) $1,515 $1,651 $802 $1,500 $1,722 $2,847
Net Interest Expense (MM) $470 $492 $713 $733 $676 $679
Depreciation & Amort. (MM) $429 $477 $579 $622 $626 $646
Earnings Per Share $2.78 $3.07 $1.42 $3.35 $3.84 $5.43
Diluted Shares (MM) 414 415 432 447 448 450
Free Cash Flow (MM) $45 -$1,902 -$296 $1,849 $1,704 $2,412
Capital Expenditures (MM) $2,141 $3,848 $2,195 $697 $1,202 $1,237
Net Current Assets (MM) -$1,354 -$1,623 -$851 -$2,409 -$929 -$79
Long Term Debt (MM) $8,873 $12,480 $14,228 $12,748 $12,696 $12,742
Net Debt / EBITDA 4.0 5.31 7.3 4.34 3.9 2.91

A Very Low P/E Ratio but Trades Above Its Graham Number:

ONEOK has a trailing twelve month P/E ratio of 12.1, compared to an average of 22.89 for the Utilities sector. Based on its EPS guidance of $4.97, the company has a forward P/E ratio of 13.3. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 11.8%. On this basis, ONEOK's PEG ratio is 1.03. Using instead the 9.0% weighted average of ONEOK's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 1.36, which shows that its shares might be fairly priced. In contrast, ONEOK is likely overvalued compared to the book value of its equity, since its P/B ratio of 2.39 is higher than the sector average of 1.03. The company's shares are currently trading 51.4% above their Graham number.

ONEOK Has an Average Rating of Buy:

The 17 analysts following ONEOK have set target prices ranging from $65.0 to $80.0 per share, for an average of $74.47 with a buy rating. As of April 2023, the company is trading -11.4% away from its average target price, indicating that there is an analyst consensus of some upside potential.

ONEOK has an average amount of shares sold short because 2.2% of the company's shares are sold short. Institutions own 70.4% of the company's shares, and the insider ownership rate stands at 0.46%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $3,968,289,049.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.