On Thursday, Stifel, a financial services firm, updated its stance on ONE Gas Inc. (NYSE: NYSE:OGS) stock, increasing the company's price target to $74 from the previous $73 while keeping a Hold rating. The adjustment comes after ONE Gas provided guidance that exceeded both Stifel's and other analysts' expectations.
According to InvestingPro data, the stock currently trades at $74.04 with a P/E ratio of 19.35, suggesting the market has already priced in much of the positive outlook. The company also expressed confidence in achieving the upper end of its five-year earnings per share (EPS) guidance range, which is set at 4-6%.
ONE Gas's optimism is partly attributed to ongoing system upgrades and regional growth spurred by new housing developments within its service territory. The company's strong fundamentals are evidenced by its 11-year streak of consecutive dividend increases, currently yielding 3.52%.
Stifel's decision to maintain the Hold rating while adjusting the price target reflects minor revisions in their financial model, with InvestingPro noting that five analysts have recently revised their earnings expectations upward. These revisions include expectations for lower operations and maintenance (O&M) cost growth and reduced needs for equity financing.
The updated financial model takes into account the company's performance and market conditions, leading to a slightly higher estimate for ONE Gas's future earnings. Stifel's announcement indicates a modestly improved outlook for the company’s financial health and stock performance.
The new price target of $74 represents Stifel's valuation of ONE Gas shares based on the firm's latest analysis. This valuation is intended to guide investors on the potential price level that reflects the company's current and projected operational and financial status.
In other recent news, ONE Gas Inc. has projected steady growth and significant capital investments through 2029. The company anticipates a net income ranging between $254 million and $261 million by 2025, with earnings per diluted share expected to be $4.20 to $4.32. This positive outlook is supported by five analysts who have recently revised their earnings estimates upward, signaling confidence in ONE Gas's future.
Capital investments for 2025 are forecasted at approximately $750 million, primarily for system integrity and replacement projects. In the five-year period ending in 2029, the company expects capital investments to be between $750 million to $850 million annually, totaling around $4.0 billion. This includes approximately $1.0 billion for growth capital, which is expected to support an estimated average rate base growth of 7% to 9% per year through 2029.
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