Oneok Inc /New/ (NYSE: OKE)

Sector: Energy Industry: Oil & Gas Midstream CIK: 0001039684
Market Cap 44.55 Bn
P/B 2.02
P/E 13.34
P/S 1.41
ROIC (Qtr) 7.97
Div Yield % 7.03
Rev 1y % (Qtr) 71.89
Total Debt (Qtr) 33.73 Bn
Debt/Equity (Qtr) 1.53

About

ONEOK Inc. (OKE), a leading midstream service provider, operates in the energy industry, specializing in gathering, processing, fractionation, transportation, storage, and marine export services. The company's operations span across four primary segments: Natural Gas Gathering and Processing, Natural Gas Liquids, Natural Gas Pipelines, and Refined Products and Crude. Headquartered in Tulsa, Oklahoma, ONEOK's extensive network of pipelines, processing facilities, and storage terminals stretches over 53,000 miles, providing it with a strong competitive...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 5.66B provides exceptional 39.06x coverage of minority interest expenses 145M, showing strong core operations.
  • Operating cash flow of 5.66B provides solid 0.99x coverage of current liabilities 5.74B, showing strong operational health.
  • Tangible assets of 55.57B provide robust 39x coverage of other current liabilities 1.43B, indicating strong asset backing.
  • Operating cash flow of 5.66B provides strong 6.50x coverage of inventory 871M, indicating efficient inventory management.
  • Free cash flow of 2.92B provides healthy 0.51x coverage of current liabilities 5.74B, showing strong operational health.

Bear case

  • Operating cash flow of 5.66B barely covers its investment activities of (7.42B), with a coverage ratio of -0.76, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 5.66B provides thin coverage of dividend payments of (2.51B) with a -2.25 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 1.20B provide limited coverage of acquisition spending of (4.73B), which is -0.25x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 2.58B relative to inventory of 871M (2.96 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • High financing cash flow of (3.51B) relative to working capital of (550M), which is 6.38x suggests concerning dependence on external funding for operational needs.

Segments Breakdown of Revenue (2022)

Peer comparison

Companies in the Oil & Gas Midstream
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ENB Enbridge Inc 100.05 Bn 24.60 2.15 75.15 Bn
2 WMB Williams Companies, Inc. 73.60 Bn 31.09 6.40 27.99 Bn
3 EPD Enterprise Products Partners L.P. 69.94 Bn 12.09 1.32 33.58 Bn
4 KMI Kinder Morgan, Inc. 60.62 Bn 22.23 3.69 32.58 Bn
5 ET Energy Transfer LP 58.05 Bn 13.46 0.73 63.97 Bn
6 TRP Tc Energy Corp 55.97 Bn 22.78 5.27 44.47 Bn
7 MPLX Mplx Lp 54.03 Bn 11.23 4.22 25.92 Bn
8 OKE Oneok Inc /New/ 44.55 Bn 13.34 1.41 33.73 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.15 3.39
EV to Cash from Ops. EV/CFO 13.58 7.77
EV to Debt EV to Debt 2.28 -68.56
EV to EBIT EV/EBIT 12.41 12.77
EV to EBITDA EV/EBITDA 10.61 7.47
EV to Free Cash Flow [EV/FCF] EV/FCF 26.34 13.20
EV to Market Cap EV to Market Cap 1.73 2.49
EV to Revenue EV/Rev 2.44 4.48
Price to Book Value [P/B] P/B 2.02 94.01
Price to Earnings [P/E] P/E 13.34 12.31
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.33 -3.60
Dividend Payout Ratio % Div Payout % (Qtr) 74.90 72.05
Dividend per Basic Share Div per Share (Qtr) 4.08 1.46
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 88.10 32.66
Interest Coverage Int. cover (Qtr) 3.49 5.11
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -33.07 -17.97
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -81.45 16,113.89
Dividend Growth (1y) % Div 1y % (Qtr) 37.37 -1.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 25.47 -5.21
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 30.11 -4.54
EBIT Growth (1y) % EBIT 1y % (Qtr) 26.00 -11.94
EBT Growth (1y) % EBT 1y % (Qtr) 19.75 -230.00
EPS Growth (1y) % EPS 1y % (Qtr) 15.47 -44.55
FCF Growth (1y) % FCF 1y % (Qtr) 7.23 -0.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 29.32 -1.23
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.47 0.76
Cash Payout Ratio Cash Payout (Qtr) 0.30 0.21
Cash Ratio Cash Ratio (Qtr) 0.21 0.81
Current Ratio Curr Ratio (Qtr) 0.90 1.65
Debt to Equity Ratio Debt/Equity (Qtr) 1.53 1.11
Interest Cover Ratio Int Coverage (Qtr) 3.49 5.11
Times Interest Earned Times Interest Earned (Qtr) 3.49 5.11
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 24.30 35.86
EBIT Margin % EBIT Margin % (Qtr) 19.64 27.76
EBT Margin % EBT Margin % (Qtr) 14.01 17.28
Gross Margin % Gross Margin % (Qtr) 30.80 48.56
Net Profit Margin % Net Margin % (Qtr) 10.60 15.36