Here's Why You Should Add ONE Gas (OGS) to Your Portfolio Now

Zacks Equity Research

April 17, 2024 at 7:47 a.m.·3 min read

ONE Gas, Inc. OGS continues to benefit from strategic investments, 100% regulated operation and an expanding customer base. Given its growth opportunities, OGS makes for a solid investment option in the utility sector.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.

Growth Projections & Surprise History

The Zacks Consensus Estimate for 2024 earnings per share (EPS) is pegged at $3.86. The Zacks Consensus Estimate for 2024 sales is pinned at $2.59 billion, indicating a year-over-year increase of 9%.

OGS’ long-term (three to five years) earnings growth rate is 5%. The company delivered an average earnings surprise of 1.2% in the last four quarters.

Return on Equity (ROE)

ROE indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, ONE Gas’ ROE is 8.63%, higher than the sector’s average of 8.53%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility sector.

Debt Position

Currently, ONE Gas’ total debt to capital is 49.2%, better than the sector’s average of 60.3%.

The time-to-interest earned ratio at the end of the fourth quarter of 2023 was 3.4. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

Dividend

ONE Gas has been increasing shareholders' value by paying dividends. Currently, its quarterly dividend is 66 cents per share, resulting in an annualized dividend of $2.64 per share, up 1.5% from the previous figure of $1.60. Its current dividend yield is 4.32%, better than the Zacks S&P 500 Composite’s 1.33%.

Systematic Investments & Customer Growth

The company expects capital expenditures, including asset removal costs, to be nearly $750 million in 2024. It anticipates capital expenditures to be $4.25 billion or in the range of $750-$950 million per year during 2024-2028. Nearly 70% of the planned capital expenditure will be directed toward system integrity and replacement projects.

OGS has been steadily increasing its customer base every year since 2015 and expects average annual customer growth of 0.9% for 2024-2028 across its service territories with 23,000 new customers added in 2023.

Price Performance

In the past three months, the stock has risen 3.7% against the industry’s 1.6% decline.

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Other Stocks to Consider

A few other top-ranked stocks from the same industry are Atmos Energy ATO, MDU Resources MDU and New Jersey Resources NJR, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ATO’s long-term earnings growth rate is 7%. The company delivered an average earnings surprise of 1.2% in the last four quarters.

MDU’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for MDU’s 2024 EPS is on par with the bottom line reported in 2023.

The Zacks Consensus Estimate for NJR’s fiscal 2024 EPS indicates year-over-year growth of 9.7%. The company delivered an average earnings surprise of 105.1% in the last four quarters.

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Atmos Energy Corporation (ATO) : Free Stock Analysis Report

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ONE Gas, Inc. (OGS) : Free Stock Analysis Report

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