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Why Is ONEOK (OKE) Down 4.7% Since the Last Earnings Report?

It has been about a month since the last earnings report for ONEOK, Inc.OKE . Shares have lost about 4.7% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

ONEOK Misses Q1 Earnings, Reaffirms 2017 Guidance

ONEOK reported first-quarter 2017 operating earnings of $0.41 per share, missing the Zacks Consensus Estimate of $0.45 by 8.89%.

Reported earnings also improved 2.5% year over year.

Total Revenue

ONEOK's total revenue of $2,750 million missed the Zacks Consensus Estimate of $2,819 million by 2.47%. Revenues also jumped 55% from $1,774 million in the prior-year quarter.

Quarterly Highlights

In the quarter under review, ONEOK's adjusted earnings before interest, tax, depreciation and amortization (EBITDA) came in at $459.6, up 4.07% year over year.

In the first quarter, the company spent $2,143.8 million on cost of sales and fuel, up 79.3%.

Operating income came in at $314.4 million in the first quarter, up 0.9%.

The company incurred interest expenses of $116.4 million, down 1.5%.

Financial Condition

As of Mar 31, 2017, ONEOK had cash and cash equivalents of $310.8 million, compared with $248.9 million as of Dec 31, 2016.

Long-term debt (excluding current maturities) was $7,919.8 million as of Mar 31, 2017, down from the 2016-end level of $7,920 million.

In the first quarter, the company's cash flow from operating activities was $269 million, up from nearly $230.7 million in the year-ago period.

Capital expenditures (less allowance for equity funds used during construction) in the first quarter was $112.7 million, down from $196.4 million a year ago.

Guidance

ONEOK reaffirmed its 2017, net income guidance in the range of $575-$755 million, adjusted EBITDA in the range of $1,870-$2,130 million, distributable cash flow of $1,245-$1,505 million, capital expenditures in the range of $380-$480 million and maintenance capital expenditures in between $140-$160 million.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

ONEOK, Inc. Price and Consensus

ONEOK, Inc. Price and Consensus | ONEOK, Inc. Quote

VGM Scores

At this time, the stock has a nice Growth Score of 'B', though it is lagging a bit on the momentum front with a 'C'. Charting a somewhat similar path, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for value and growth investors than momentum investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

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


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

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