On Thursday, Stifel maintained its Hold rating on ONE Gas Inc. (NYSE:OGS) but raised the price target to $71 from the previous $65. The adjustment follows the company's second-quarter results for 2024, which did not meet the firm's expectations, although ONE Gas has upheld its earnings guidance for the year.
The company has been recognized for its effective management of operations and maintenance (O&M) costs, particularly through its strategy of insourcing line location services. This approach has not only controlled expenses but also introduced greater flexibility in managing the workforce due to the variable nature of line-locating work.
ONE Gas's financial strategy is also noted, with potential benefits expected should the Federal Reserve's fund rates decrease. In line with its financial planning, the company has recently announced a $300 million senior note offering.
Stifel's outlook on ONE Gas is positive regarding the company's long-term growth prospects, crediting its cost control initiatives for yielding positive results. The new price target reflects a valuation based on the firm's 2025 earnings estimates for ONE Gas.
In other recent news, ONE Gas has expanded its revolving credit facility by $75 million, bringing the total commitment to $1.275 billion. This increase is an amendment to the existing $1.2 billion credit agreement, with Bank of America continuing to serve as the administrative agent, swing line lender, and letter of credit issuer. ONE Gas has not disclosed specific plans regarding the use of these additional funds.
ONE Gas also reported strong first quarter performance for 2024, with net income reaching $99 million, despite a 5% increase in operations and maintenance expenses compared to the previous year. The company's revenue growth was driven by new rates and customer growth, and it remains on track to hit the midpoint of its 2024 financial guidance.
In addition, ONE Gas received a revised price target from Mizuho, now set at $65.00, up from the previous $64.00. Mizuho maintains a Neutral stance on the company's stock, acknowledging the challenges posed by higher short-term rates but also noting potential benefits such as higher capital costs bolstering return on equity in upcoming rate case decisions. These are among the recent developments for ONE Gas, providing investors with insights into the company's current standing and future prospects.
InvestingPro Insights
As ONE Gas Inc. (NYSE:OGS) navigates through its financial strategies and operational management, real-time data from InvestingPro provides a deeper look into the company's current standing. With a market capitalization of $3.81 billion and a P/E ratio of 16.98, the company shows a stable valuation in the market. Notably, ONE Gas has maintained profitability over the last twelve months, which aligns with Stifel's positive outlook on the company's long-term growth.
InvestingPro Tips highlight that ONE Gas operates with a significant debt burden, yet it has successfully raised its dividend for 10 consecutive years, showcasing a commitment to shareholder returns. Moreover, the company has seen three analysts revise their earnings upwards for the upcoming period, indicating potential optimism in its future performance. For readers interested in a more comprehensive analysis, there are additional InvestingPro Tips available on the ONE Gas page at https://www.investing.com/pro/OGS.
With a dividend yield of 3.93% and a track record of dividend growth, investors may find ONE Gas an attractive option for steady income. The company's next earnings date is set for November 4, 2024, which will be a critical point for investors to assess the company's trajectory in line with Stifel's revised price target.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.