ONEOK Optimistic on Future Growth - Analyst Blog


Diversified energy company ONEOK Inc. ( OKE ) is expected to deliver strong results between 2012 and 2014 on the back of solid performances from its general partner ONEOK Partners ( OKS ).

ONEOK projects that its net income will improve by 18% annually between 2012 and 2014. During this period the company has planned to increase its dividend payment by 40%, which includes a projected dividend increase of 5 cents per share on a pre-split basis in July 2012, subject to ONEOK board approval.

The positive projection is attributed to natural gas and natural gas liquids volume growth at ONEOK Partners. This would be brought about by planned investments of $5 billion made in growth projects which are expected to come online by 2015.

1Q12 Recap

The first quarter results of the company fell short of our expectation primarily due to a steep decline in natural gas prices and a warmer winter in its service territories.

Despite the weak showing in the first quarter, the company maintained its net income guidance for 2012 in the range of $360 million to $410 million, mainly due to the strength at ONEOK Partners as displayed during the quarter.

The Zacks Consensus Estimates for the second quarter and fiscal 2012 are currently at 69 cents and $3.58, respectively.

Our view

We believe ONEOK's decision to split the stock, effective from June 1, 2012, and a bullish projection for the next couple years offer investors a solid investment thesis. Potentially higher returns at a cheaper price will likely draw more investors towards the company.

Based in Tulsa, Oklahoma, ONEOK Inc. is a diversified energy company, operating as a natural gas distributor primarily in the United States. The company presently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

ONEOK INC (OKE): Free Stock Analysis Report
ONEOK PARTNERS (OKS): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: OKE , OKS

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