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Will ONEOK Continue to Outperform Its Peers?

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Dec. 4 2020, Updated 10:53 a.m. ET

ONEOK in 2018

So far, ONEOK (OKE) has risen nearly 9% in 2018. In comparison, Enterprise Products Partners (EPD), Targa Resources (TRGP), and Kinder Morgan (KMI) have fallen nearly 1%, 6%, and 13%, respectively, during the same period. The Energy Select Sector SPDR ETF (XLE) has risen nearly 1% year-to-date. So, ONEOK has outperformed its peers in 2018. ONEOK’s strong 4Q17 performance and positive 2018 outlook likely contributed to the company’s outperformance.

The above graph compares ONEOK’s performance in 2018 with its peers.

In the past year, ONEOK has risen nearly 9%. In comparison, Kinder Morgan, Targa Resources, and Enterprise Products Partners have fallen 22%, 18%, and 1%, respectively.

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Moving averages

ONEOK is trading 4% above its 50-day moving average and 8% above its 200-day moving average. ONEOK’s 50-day moving average crossed above its 200-day average—a bullish indicator—in January 2018. ONEOK’s 50-day moving average might act as a support for the stock in the near term.

Capital projects

ONEOK plans to spend ~$2.0 billion–$2.3 billion on capital projects in 2018.

ONEOK’s Arbuckle II pipeline and MB-4 fractionator will serve the expected volumes growth in the Williston Basin and the STACK and SCOOP areas. The two projects are expected to be complete in early 2020. The projects have expected adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) multiples of 4x–6x.

ONEOK’s $1.4-billion Elk Creek pipeline project is expected to strengthen its position in the Williston, Powder River, and DJ basins. The project is expected to be complete in 2019.

Next, we’ll discuss Wall Street analysts’ recommendations for ONEOK before its 1Q18 earnings.

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