On Wednesday, ONE Gas Inc. (NYSE: NYSE:OGS), currently trading at $74.04 and up 20.9% year-to-date, received a modest price target increase from Mizuho (NYSE:MFG) Securities, with the firm raising its target to $77 from $76 while retaining a Neutral rating on the stock. The adjustment followed the company's recent announcement of its 2025 and five-year financial guidance.
According to InvestingPro data, analyst targets for ONE Gas range from $66 to $82, reflecting diverse market opinions.
ONE Gas released its financial outlook on Wednesday evening, presenting a stronger-than-expected projection for 2025 with an earnings per share (EPS) midpoint of $4.26, surpassing both Morgan Stanley (NYSE:MS)'s estimate of $4.20 and the consensus forecast of $4.15.
This positive forecast is attributed to the company's proactive regulatory strategy in recent years. InvestingPro analysis reveals that 5 analysts have recently revised their earnings estimates upward, suggesting growing confidence in the company's outlook.
The five-year outlook provided by ONE Gas also appeared robust, as the company indicated it expects to be at the high end of its projected 4-6% EPS growth rate through 2029. This announcement comes despite the company's plans for a 6% reduction in capital expenditures and a 35% decrease in external financing needs compared to previous plans.
InvestingPro data shows the company maintains a solid 3.57% dividend yield and has increased its dividend for 11 consecutive years, demonstrating consistent shareholder returns despite market fluctuations.
The company's management emphasized a strategic approach that aims for an 'optimal' level of spending coupled with reduced reliance on external financing to minimize capital market risks, which have historically contributed to volatility in ONE Gas's earnings outlook.
Mizuho's analyst noted an alignment with the company's strategy, though also acknowledged that continued exposure to short-term interest rates could still result in volatility, despite currently acting as a potential tailwind. Based on InvestingPro's comprehensive analysis, ONE Gas currently shows a FAIR overall Financial Health Score, trading at a P/E ratio of 19.35x.
The revised price target reflects lower estimates but is coupled with a slightly higher target multiple, indicating a nuanced perspective on the company's financial strategy and future performance.
In other recent news, ONE Gas Inc. has seen a series of positive developments. Financial services firm Stifel has modestly increased ONE Gas's price target to $74, following the company's guidance that exceeded analysts' expectations. This is largely due to the company's confidence in achieving the upper end of its five-year earnings per share (EPS) guidance range, set at 4-6%.
The company's optimistic outlook is also supported by ongoing system upgrades and regional growth, as well as its strong fundamentals, evidenced by an 11-year streak of consecutive dividend increases. In addition, ONE Gas has projected steady growth and significant capital investments through 2029, with a net income ranging between $254 million and $261 million by 2025.
The company also expects earnings per diluted share to be $4.20 to $4.32, a projection that has been endorsed by five analysts who have recently revised their earnings estimates upward. In terms of capital investments, ONE Gas anticipates an expenditure of approximately $750 million for 2025, primarily for system integrity and replacement projects.
Furthermore, the company has raised its 2024 EPS guidance to $3.85-$3.95, despite a challenging market and a decrease in net income compared to the previous year.
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