ONEOK's (NYSE:OKE) Shareholders May Want To Dig Deeper Than Statutory Profit

ONEOK, Inc.'s (NYSE:OKE ) stock didn't jump after it announced some healthy earnings. Our analysis showed that there are some concerning factors in the earnings that investors may be cautious of.

Our free stock report includes 1 warning sign investors should be aware of before investing in ONEOK. Read for free now.

In order to understand the potential for per share returns, it is essential to consider how much a company is diluting shareholders. In fact, ONEOK increased the number of shares on issue by 7.0% over the last twelve months by issuing new shares. That means its earnings are split among a greater number of shares. Per share metrics like EPS help us understand how much actual shareholders are benefitting from the company's profits, while the net income level gives us a better view of the company's absolute size. You can see a chart of ONEOK's EPS by clicking here.

A Look At The Impact Of ONEOK's Dilution On Its Earnings Per Share (EPS)

ONEOK has improved its profit over the last three years, with an annualized gain of 102% in that time. But EPS was only up 52% per year, in the exact same period. And at a glance the 35% gain in profit over the last year impresses. But in comparison, EPS only increased by 18% over the same period. Therefore, the dilution is having a noteworthy influence on shareholder returns.

Changes in the share price do tend to reflect changes in earnings per share, in the long run. So ONEOK shareholders will want to see that EPS figure continue to increase. But on the other hand, we'd be far less excited to learn profit (but not EPS) was improving. For that reason, you could say that EPS is more important that net income in the long run, assuming the goal is to assess whether a company's share price might grow.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On ONEOK's Profit Performance

Each ONEOK share now gets a meaningfully smaller slice of its overall profit, due to dilution of existing shareholders. Therefore, it seems possible to us that ONEOK's true underlying earnings power is actually less than its statutory profit. Nonetheless, it's still worth noting that its earnings per share have grown at 52% over the last three years. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. If you want to do dive deeper into ONEOK, you'd also look into what risks it is currently facing. Every company has risks, and we've spotted 1 warning sign for ONEOK you should know about.

Today we've zoomed in on a single data point to better understand the nature of ONEOK's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.