The case for & against
Bull & Bear analysis
ONE Gas, Inc. (NYSE: OGS) is a dominant player in the natural gas utility sector, serving approximately 2.3 million customers across Kansas, Oklahoma, and Texas. The company is focused on delivering safe and reliable natural gas services while prioritizing operational efficiency and regulatory compliance. With an increasing emphasis on infrastructure investments, particularly in pipeline replacement and system enhancement, ONE Gas is strategically positioned to capitalize on the growing demand for natural gas in both residential and commercial markets. The current trend of rising housing developments and a shift towards natural gas for power generation presents significant growth opportunities for the firm.
Bull says
- ↑Adjusted EPS rose 6% YoY to $2.11 in Q1’26, driven by rate adjustments and execution.
- ↑Texas HB 4384 expected to contribute ~$12M variance in annual EPS, enhancing project recoveries.
- ↑Announced $4.3B five-year capex plan with $170M in Q1’26 infrastructure investments.
- ↑Added 23K new meters annually amid rising housing developments, fueling customer growth.
- ↑Analysts see 12% upside to $90.22, flagging undervaluation against peers.
- ↑High earnings yield and book-to-price ratio, plus low stock volatility and consistent 68¢ dividend underpin stability.
Bear says
- ↓Operating & maintenance expenses jumped 8.6% YoY, above 4% CAGR guidance.
- ↓Negative profitability and downward earnings revisions suggest efficiency and growth concerns.
- ↓High leverage amid rising rates may escalate interest costs and limit flexibility.
- ↓Negative growth factor and low institutional ownership risk heightening volatility.
- ↓Analysts warn stock may be priced for perfection, given slim margin for error.
- ↓Long-term risk from energy transition may dampen natural gas demand.
Investment themes with OGS
Companies paying above-average dividends
Earnings Call · Q1 2025 · Mgmt. Guidance
Transcript signals
Bull points
- Oklahoma Natural Gas filed its annual performance-based rate change application in February, seeking a $41.5 million adjustment, with rates expected to go into effect in late June.
- For the Central Gulf region, we are requesting a $15.4 million revenue increase, and for the West North region, we are seeking an $8.2 million increase, both to be effective in June.
- We've installed almost 24,000 feet of pipe and are on track to have the project in service during the fourth quarter of this year.
Bear points
- Other income net decreased by just under $3 million compared with the same period last year, primarily due to decreases in the market value of investments associated with our non-qualified employee benefit plan.
- Excluding amounts related to KGSS1, interest expense in the first quarter was $4.7 million higher than the same period in 2024, which reflects the maturity of lower coupon notes in February and March 2024, the reopening of our 5.1% senior notes last August to issue an additional $250 million, and higher average commercial paper balances.