As you might know, ONEOK, Inc. (NYSE:OKE) last week released its latest first-quarter, and things did not turn out so great for shareholders. ONEOK reported an earnings miss, with US$4.8b revenues falling 16% short of analyst models, and statutory earnings per share (EPS) of US$1.09 also coming in slightly below expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for ONEOK from nine analysts is for revenues of US$23.4b in 2024. If met, it would imply a substantial 30% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 29% to US$4.98. In the lead-up to this report, the analysts had been modelling revenues of US$24.1b and earnings per share (EPS) of US$4.93 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.
The consensus has reconfirmed its price target of US$83.49, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on ONEOK's market value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on ONEOK, with the most bullish analyst valuing it at US$93.00 and the most bearish at US$70.00 per share. This is a very narrow spread of estimates, implying either that ONEOK is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that ONEOK's rate of growth is expected to accelerate meaningfully, with the forecast 43% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 17% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.1% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that ONEOK is expected to grow much faster than its industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$83.49, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple ONEOK analysts - going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 4 warning signs for ONEOK (1 can't be ignored!) that we have uncovered.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.