ONEOK Inc. OKE is expected to report an improvement in its top and bottom lines when it reports 2024 results on Feb. 24, after market close.

Find the latest earnings estimates and surprises on Zacks Earnings Calendar.

The Zacks Consensus Estimate for OKE’s fourth-quarter revenues is pegged at $6.56 billion, indicating growth of 25.2% from the year-ago reported figure.

The Zacks Consensus Estimate for earnings is pegged at $1.45 per share. The Zacks Consensus Estimate for OKE’s fourth-quarter earnings indicates an increase of 22.88% from the year-ago reported figure.

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What the Zacks Model Unveils

Our model does not conclusively predict a likely earnings beat for OKE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you can see below.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: OKE has an Earnings ESP of 0.00%.

Zacks Rank: ONEOK currently carries a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other stocks in the same sector that have the combination of factors indicating an earnings beat this season are DT Midstream DTM, Kimbell Royalty Partners, LP KRP and Sitio Royalties STR. DTM, KRP and STR have an Earnings ESP of +0.28%, +24.32% and +7.69%, respectively. KRP currently sports a Zacks Rank #1, while the other two currently carry a Zacks Rank of 2 each.

Factors Likely to Have Shaped OKE’s Q4 Earnings

In October 2024, ONEOK completed the acquisition of Medallion Midstream from Global Infrastructure Partners for a total cash consideration of nearly $2.6 billion. This acquisition further diversifies ONEOK's asset portfolio and adds an expansive and well-connected crude oil gathering system to its Permian Basin platform. The strategic acquisition is expected to produce considerable cost savings and synergies, further enhancing the company’s profitability. This acquisition is likely to have contributed to fourth-quarter earnings.

ONEOK addresses the need for storage capacity of its customers and activated 3 Bcf of previously idled storage capacity in Texas in the first half of 2024. This project has firm contracts extending beyond 2030, which is likely to have contributed to fourth-quarter earnings.

In the Permian Basin, the completion of two third-party processing plants is expected to contribute to rising volumes in the pipelines in the fourth quarter. Strong fee-based earnings across OKE’s systems and stable performance from the Natural Gas Pipeline segment are likely to have boosted fourth-quarter earnings.

Increasing natural gas processed volumes in ONEOK’s Natural Gas Gathering and Processing segment, due to the connection of new wells in the Rocky Mountain region, are likely to have contributed to fourth-quarter earnings.

OKE’s Price Performance

OKE’s shares have gained 34.5% in the past 12 months compared with its industry’s rally of 27.7%.

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OKE Valuation

ONEOK is currently trading at a premium on a P/E F 12M basis.

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Investment Thesis

ONEOK stands to benefit from strong fee-based earnings across its system and midstream assets located in higher productive regions. As production volumes continue to improve in its service areas, the company expects to perform better in the long run.

ONEOK is also working toward increasing its natural gas storage capacity. It activated 3 billion cubic feet of natural gas storage capabilities in Texas to cater to rising demand in the region. Storage capacity will allow OKE to stock natural gas during off-peak periods and supply it to customers during peak demand periods.

To Sum Up

ONEOK’s fourth-quarter earnings are expected to have benefited from increasing production volumes in service regions and the steady addition of storage facilities.

Fee-based earnings and contribution of the acquired assets are also likely to have contributed to fourth-quarter earnings.

The company is presently trading at a premium, so those who already own this stock would do well to retain this Zacks Rank #3 stock in their portfolio. Others should wait for the earnings and look for a better entry point in 2025.

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ONEOK, Inc. (OKE) : Free Stock Analysis Report

Sitio Royalties Corp. (STR) : Free Stock Analysis Report

Kimbell Royalty (KRP) : Free Stock Analysis Report

DT Midstream, Inc. (DTM) : Free Stock Analysis Report

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