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ONE Gas (OGS) Down 4.8% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for ONE Gas (OGS). Shares have lost about 4.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is ONE Gas due for a breakout? 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.

ONE Gas Q2 Earnings Miss Estimates, Revenues Beat

ONE Gas Inc. reported second-quarter 2022 operating earnings per share (EPS) of 59 cents, which missed the Zacks Consensus Estimate of 62 cents by 4.8%.

However, the bottom line improved by 5.4% from the year-ago earnings of 56 cents per share, primarily due to contributions from the new rates and demand from an expanding residential customer base.

Total Revenues

ONE Gas recorded revenues of $428.9 million in the second quarter, which surpassed the Zacks Consensus Estimate of $348 million by 23.3%. The top line also improved by 35.9% from the year-ago level.

Highlights of the Release

Total natural gas volumes delivered in the second quarter were 73.9 billion cubic feet, up 0.8% 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 6.7% from the year-ago figure to $182.2 million.

The operating income in the reported quarter increased 14.7% year over year to $58.6 million.

ONE Gas incurred net interest expenses of $16.3 million, up 8.7%.

Financial Highlights

As of Jun 30, 2022, OGS had cash and cash equivalents of $7.4 million compared with $8.9 million as of Dec 31, 2021.

Long-term debt (excluding current maturities) was $2,283.9 million as of Jun 30, 2022 compared with $3,683.4 million as of Dec 31, 2021.

Cash provided by (used in) operating activities for the first six months of 2022 was $286.7 million compared with ($1,577.3) 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, higher than the Zacks Consensus Estimate of $4.05 per share.

Capital expenditure is expected at $650 million for 2022.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -20.64% due to these changes.

VGM Scores

At this time, ONE Gas has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. 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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