ONEOK, Inc. Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

ONEOK, Inc. (NYSE:OKE) missed earnings with its latest first-quarter results, disappointing overly-optimistic forecasters. ONEOK reported an earnings miss, with US$4.8b revenues falling 16% short of analyst models, and statutory earnings per share (EPS) of US$1.09 also coming in slightly below expectations. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for ONEOK

Taking into account the latest results, the current consensus from ONEOK's nine analysts is for revenues of US$22.8b in 2024. This would reflect a substantial 27% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 30% to US$4.99. In the lead-up to this report, the analysts had been modelling revenues of US$24.1b and earnings per share (EPS) of US$4.93 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The average price target was steady at US$82.66even though revenue estimates declined; likely suggesting the analysts place a higher value on earnings. 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$90.00 per share, while the most bearish prices it at US$70.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting ONEOK is an easy business to forecast or the the analysts are all using similar assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ONEOK's past performance and to peers in the same industry. The analysts are definitely expecting ONEOK's growth to accelerate, with the forecast 38% annualised growth to the end of 2024 ranking favourably alongside historical growth of 17% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 2.2% 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 obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 forecasts for ONEOK going out to 2026, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with ONEOK (at least 1 which makes us a bit uncomfortable) , and understanding these should be part of your investment process.

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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.