) is slated to release its second-quarter 2012 earnings results
after the market close on October 30, 2012.
Second Quarter Performance
The company reported second-quarter profit of 29 cents per share,
ahead of 25 cents per share in the year-ago quarter. The
quarterly results lagged the Zacks Consensus Estimate of 34 cents
The year-over-year growth was attributable to higher margins at
ONEOK Partners, which stemmed from better natural gas gathering
and processing and natural gas liquids business.
Net revenues in the quarter dropped 26.6% to $2.53 billion from
$3.45 billion reported in the year-ago quarter. The top line also
missed the Zacks Consensus Estimate of $3.47 billion.
In the second quarter 2012, cost of sales and fuel was down 32.3%
year over year. As a result, gross income rose 5.8% to $548.9
million in the reported quarter from the year-ago level of $518.9
Total operating expenses increased 4.5% year over year, mainly
due to higher operations and maintenance expenses of the company.
Post second quarter earnings results, ONEOK Inc. lowered its net
income guidance for 2012 to a range of $345 million to $375
million from the prior range of $360 million to $410 million. The
company cut its full year expectation assuming low earnings from
its Energy Services and Natural Gas Distribution segments offset
marginally by higher expected earnings from ONEOK Partners.
ONEOK's capital expenditure for 2012 is expected to be $2.3
billion, comprising approximately $2.0 billion for ONEOK Partners
and $304 million on a stand-alone basis.
The Zacks Consensus Estimate for the third quarter 2012 is 32
cents per share, up an estimated 13.45% from 28 cents reported in
the year-ago quarter. The current Zacks Consensus Estimate ranges
between 30 cents per share and 36 cents per share.
The full year 2012 Zacks Consensus Estimate is $1.68, up 0.6%
from $1.67 reported in the previous year. The current Zacks
Consensus Estimate ranges between $1.55 per share and $1.80 per
Estimate Revisions Trend
The past 30 days have seen 2 of 9 estimates declining for the
third quarter, while none moved in the opposite direction. There
were no changes in the quarterly estimates in the last 7 days.
For full year 2012, of the 9 available estimates, there have been
2 downward revisions in estimates, while none moved in the
opposite direction, in the last 30 days. There were no changes in
the estimates in the prior 7 days.
The Zacks Consensus Estimate for the third quarter and for the
full year remained unchanged in the last 7 days. However,
estimates for the third quarter as well as for the full year
moved down by a penny each in the last 30 days.
With respect to earnings surprise, the company's performance
failed to measure up to expectations in the trailing four
quarters. The results of the company surpassed our expectation in
one of the last four quarters, while earnings fell short of
expectation in two quarters while finishing at par in the
The earnings surprise in the last four quarters ranged from
(21.54%) to 1.89%. The average surprise over the last four
quarters remained a negative 11.45%.
The positive catalysts for the company are its steady progress in
growth projects, deployment of $1 billion in additional projects
and strong contribution from the ONEOK Partners segment.
However, we believe the continued slack performance of its Energy
Services segment, volatile credit markets, strict utility
regulations, dependence on weather patterns and unpredictable
commodity prices are negatively impacting the overall performance
of the company.
Evaluating the pros and cons, we decided to maintain our
long-term Neutral recommendation on ONEOK shares, supported by a
short-term Zacks #3 Rank (Hold). The company's primary
OGE Energy Corp.
Based in Tulsa, Oklahoma, ONEOK Inc. is a diversified energy
company, operating as a natural gas distributor primarily in the
United States. With a market capitalization of $9.67 billion, the
company has 4,795 full time employees.
DYNEGY INC-NEW (DYN): Free Stock Analysis
OGE ENERGY CORP (OGE): Free Stock Analysis
ONEOK INC (OKE): Free Stock Analysis Report
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