Earnings Report: ONEOK, Inc. Missed Revenue Estimates By 9.5%

Last week saw the newest full-year earnings release from ONEOK, Inc. (NYSE:OKE), an important milestone in the company's journey to build a stronger business. Revenues came in 9.5% below expectations, at US$18b. Statutory earnings per share were relatively better off, with a per-share profit of US$5.48 being roughly in line with analyst estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for ONEOK

After the latest results, the eight analysts covering ONEOK are now predicting revenues of US$26.4b in 2024. If met, this would reflect a substantial 49% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 8.0% to US$4.92. In the lead-up to this report, the analysts had been modelling revenues of US$24.3b and earnings per share (EPS) of US$5.15 in 2024. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a substantial to revenue, the consensus also made a minor downgrade to its earnings per share forecasts.

The consensus price target was unchanged at US$77.02, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values ONEOK at US$87.00 per share, while the most bearish prices it at US$62.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await ONEOK shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that ONEOK's rate of growth is expected to accelerate meaningfully, with the forecast 49% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 17% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 1.7% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that ONEOK is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$77.02, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple ONEOK analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for ONEOK you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.