ONEOK Expects 17% Earnings Growth in 2018



ONEOK’s 2018 guidance

ONEOK (OKE) expects its 2018 adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to be $2.22 billion–$2.42 billion. Based on the mid-point of the guidance range, ONEOK expected that the EBITDA growth for 2018 would be 17%—compared to $1.99 billion in 2017. ONEOK expects its 2018 distributable cash flow to be $1.62 billion–$1.82 billion.

ONEOK expects its Natural Gas Liquids segment to contribute ~60% of its 2018 expected EBITDA. The Natural Gas Gathering and Processing segment is expected to contribute ~25%, while the Natural Gas Pipelines segment is expected to contribute ~15% to ONEOK’s 2018 EBITDA.

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The above graph shows the dividends that ONEOK has paid each year since 2014. The graph also shows ONEOK’s expected dividend payment for 2018. The mid-point of the range implies 21% growth in the dividends expected to be paid in 2018—compared to 2017.

As we discussed in a previous part of this series, ONEOK expects its 2018 growth capital expenditures to be ~$2.0 billion–$2.3 billion.

Stock performance

ONEOK stock has risen 8% in the past year. ONEOK outperformed Enterprise Products Partners (EPD), Kinder Morgan (KMI), and the Energy Select Sector SPDR ETF (XLE). They fell 7%, 21%, and 3%, respectively, during the same period, ONEOK has risen 5% year-to-date.

Analysts’ recommendations

Two analysts raised ONEOK’s target price in February 2018. Of the analysts surveyed by Reuters, 47% rate ONEOK as a “buy” and 53% rate the stock as a “hold.” Read Are Wall Street Analysts Bullish on ONEOK? to learn more about analysts’ recommendations for ONEOK and how the recommendations have changed in the past year.


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