ONE Gas, Inc. (NYSE: OGS)

Sector: Utilities Industry: Utilities - Regulated Gas CIK: 0001587732
Market Cap 4.50 Bn
P/B 2.32
P/E 29.67
P/S 3.07
ROIC (Qtr) 3.93
Div Yield % 2.50
Rev 1y % (Qtr) 11.38
Total Debt (Qtr) 3.40 Bn
Debt/Equity (Qtr) 1.07
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About

ONE Gas, Inc. (OGS) is a prominent player in the utilities industry, specializing in the distribution of natural gas. Headquartered in Tulsa, Oklahoma, the company serves approximately 2.3 million customers across Oklahoma, Kansas, and Texas. ONE Gas is a publicly traded company, listed on the New York Stock Exchange under the ticker symbol OGS. The company's primary business activities revolve around the distribution of natural gas to a diverse range of customers, including residential, commercial, and transportation sectors. ONE Gas offers a...

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Investment thesis

Bull case

  • Operating cash flow of 598.45M provides strong 41.05x coverage of stock compensation 14.58M, indicating sustainable incentive practices.
  • Tangible assets of 8.10B provide robust 28.12x coverage of other current liabilities 288.25M, indicating strong asset backing.
  • Retained earnings of 863.78M provide strong 2.16x coverage of intangibles 399.43M, indicating quality earnings retention.
  • Operating cash flow of 598.45M exceeds receivables of 210.17M by 2.85x, demonstrating excellent collection efficiency.
  • Strong tangible asset base of 8.10B provides 20.29x coverage of intangibles 399.43M, indicating robust asset quality.

Bear case

  • Operating cash flow of 598.45M barely covers its investment activities of (729.12M), with a coverage ratio of -0.82, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 20.79M against inventory of 295.50M, the 0.07 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 598.45M provides thin coverage of dividend payments of (157.90M) with a -3.79 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of (120.56M) provides weak coverage of capital expenditures of 719.01M, with a -0.17 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 541.82M show weak coverage of depreciation charges of 313.40M, with a 1.73 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Utilities - Regulated Gas
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ATO Atmos Energy Corp 28.99 Bn 23.20 5.95 9.63 Bn
2 NI Nisource Inc. 14.62 Bn 27.48 3.16 16.21 Bn
3 UGI Ugi Corp /Pa/ 8.33 Bn 13.88 1.13 7.21 Bn
4 NJR New Jersey Resources Corp 5.43 Bn 16.61 2.52 3.97 Bn
5 BKH Black Hills Corp /Sd/ 5.38 Bn 18.44 2.33 4.70 Bn
6 SR Spire Inc 5.36 Bn 19.83 2.09 5.35 Bn
7 SWX Southwest Gas Holdings, Inc. 5.04 Bn 19.06 1.48 3.51 Bn
8 OGS ONE Gas, Inc. 4.50 Bn 29.67 3.07 3.40 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.69 0.79
EV to Cash from Ops. EV/CFO 22.08 18.36
EV to Debt EV to Debt 1.71 1.86
EV to EBIT EV/EBIT 17.40 -126.33
EV to EBITDA EV/EBITDA 11.55 11.96
EV to Free Cash Flow [EV/FCF] EV/FCF -144.42 -73.99
EV to Market Cap EV to Market Cap 1.29 1.71
EV to Revenue EV/Rev 3.97 3.19
Price to Book Value [P/B] P/B 2.32 2.59
Price to Earnings [P/E] P/E 29.67 77.08
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.61 1.42
Dividend Payout Ratio % Div Payout % (Qtr) 61.90 47.06
Dividend per Basic Share Div per Share (Qtr) 2.67 1.78
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -133.30 54.25
Interest Coverage Int. cover (Qtr) 3.71 3.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -2.73 -16.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -27.72 44.73
Dividend Growth (1y) % Div 1y % (Qtr) 1.52 -0.03
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 13.92 6.88
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 13.33 113.90
EBIT Growth (1y) % EBIT 1y % (Qtr) 15.76 26.96
EBT Growth (1y) % EBT 1y % (Qtr) 19.63 12.44
EPS Growth (1y) % EPS 1y % (Qtr) 12.24 24.35
FCF Growth (1y) % FCF 1y % (Qtr) 59.42 -146.22
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 9.51 10.16
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.28 0.36
Cash Payout Ratio Cash Payout (Qtr) 0.12 0.12
Cash Ratio Cash Ratio (Qtr) 0.01 0.15
Current Ratio Curr Ratio (Qtr) 0.47 0.94
Debt to Equity Ratio Debt/Equity (Qtr) 1.07 3.58
Interest Cover Ratio Int Coverage (Qtr) 3.71 3.17
Times Interest Earned Times Interest Earned (Qtr) 3.71 3.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 36.10 32.74
EBIT Margin % EBIT Margin % (Qtr) 22.87 21.43
EBT Margin % EBT Margin % (Qtr) 16.71 13.06
Gross Margin % Gross Margin % (Qtr) 59.00 43.32
Net Profit Margin % Net Margin % (Qtr) 10.80 9.98