ONE Gas (OGS) has attracted steady interest lately, with shares showing a 17% climb so far this year. The stock’s recent strength invites a closer look at what is driving investor attention in the current utilities landscape.
See our latest analysis for ONE Gas.
Despite a brief dip over the past week, ONE Gas has seen its share price climb 17.3% year-to-date, with longer-term total shareholder returns also on the upswing. Recent momentum suggests growing optimism around the company’s earnings growth and defensive position in the utilities sector.
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But after such a robust run, are investors still underestimating ONE Gas’s potential? Or has the recent surge already priced in the company’s earnings prospects and future growth, leaving little room for upside?
ONE Gas is trading just above the narrative’s fair value target, indicating that recent market optimism is largely matched by consensus estimates for future growth and profitability.
Favorable regulatory developments, particularly Texas House Bill 4384, enable full recovery of capital expenditures and reduce regulatory lag. This is anticipated to drive higher earnings and more predictable net profit margins in the coming years.
What hidden assumptions power this razor-thin fair value call? Analysts are banking on bold earnings expansion and a profit margin boost not seen in previous cycles. Want to know exactly what future leap gets baked into the math? Brace for a deep dive into projections that could reset investor expectations.
Result: Fair Value of $80.07 (ABOUT RIGHT)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, sustained high capital expenses or unexpected regulatory hurdles could quickly challenge the optimistic outlook for ONE Gas and could alter its fair value trajectory.
Find out about the key risks to this ONE Gas narrative.
While the narrative’s fair value hinges on growth and earnings projections, the market’s price-to-earnings ratio for ONE Gas stands at 19.4x. This is lower than peers at 22.1x, but is actually higher than both its fair ratio of 18.9x and the broader global gas utilities average of 13.7x. This small gap hints at both modest value and some valuation risk. Could the market shift toward the fair ratio, or will optimism persist?
See what the numbers say about this price — find out in our valuation breakdown.
If you want the data to speak for itself, dive in and shape your own forecast. It’s quicker than you might expect, and anyone can Do it your way.
A great starting point for your ONE Gas research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
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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.
Companies discussed in this article include OGS.
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