Where ONEOK Stands After a 28% Drop and Strong Free Cash Flow Forecasts

If you have been watching ONEOK’s stock recently, you may be wondering where it’s headed next and if now is the time to make your move. The decision gets trickier with price swings to consider, but let’s break down what is really driving the stock right now. While shares are off slightly over the past week and have barely budged in the last month, there is a much more dramatic story if you zoom out. ONEOK is down 28.5% year-to-date, and off 19.7% from a year ago. Yet over the long haul, the company’s shares have outpaced many competitors, with a 59.8% gain over three years and a remarkable 239.0% surge over five years.

Investors are recalibrating their expectations amid broader market shifts and changes in the energy sector. Recently, pipeline and midstream companies like ONEOK have been caught between optimism about rising U.S. energy demand and caution about fluctuating natural gas prices, along with questions around infrastructure resilience. For some, these kinds of market developments add to perceived risk, but for others, they open the door to future growth if ONEOK’s fundamentals hold up.

That brings us to valuation, a key part of deciding what to do with ONEOK stock. By our latest check, ONEOK comes in undervalued on 4 out of 6 measures, giving it a solid value score of 4. But what does that really mean for potential investors, and how does it compare to your other options? Let’s walk through the different ways analysts judge whether ONEOK is a bargain, and continue to a deeper look at valuation at the end.

Why ONEOK is lagging behind its peers

Approach 1: ONEOK Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model takes all of ONEOK’s expected future cash flows, projects them over many years, and then calculates what they would be worth in today’s dollars. This method helps investors estimate what a company is really worth, based on how much cash it could bring in over time.

According to the latest data, ONEOK’s most recent Free Cash Flow (FCF) was $2.91 billion. Analyst forecasts anticipate significant growth, with estimates reaching $4.47 billion by 2026 and rising to a projected $4.98 billion by 2029. Although analyst estimates typically extend to five years, these numbers are further extrapolated for a full ten-year outlook, showing a steady climb in FCF over the next decade.

Bringing those future cash flows back to today’s terms, the DCF model values ONEOK shares at $154 each. This represents a 52.8% discount to the current share price, indicating that the stock is significantly undervalued based on these cash flow projections.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for ONEOK.

Our Discounted Cash Flow (DCF) analysis suggests ONEOK is undervalued by 52.8%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: ONEOK Price vs Earnings

For profitable companies like ONEOK, the Price-to-Earnings (PE) ratio is often the preferred way to measure valuation. This metric tells investors how much they are paying for every dollar of the company’s earnings, making it especially relevant when the business has steady and reliable profits.

A "normal" or "fair" PE ratio is not set in stone. It can swing higher for companies with strong growth expectations, lower risks, or particularly robust profit margins. Conversely, higher risks, flat growth, or earnings uncertainty usually suppress this ratio. That means what looks expensive for one company could be cheap for another, depending on the outlook.

Currently, ONEOK is trading at a PE ratio of 14.8x, a touch above the oil and gas industry average of 13.1x and close to its peer average of 14.8x. However, a more tailored benchmark is Simply Wall St’s proprietary “Fair Ratio.” This figure, 18.9x for ONEOK, considers not only the company’s earnings but also factors in its growth prospects, profit margins, market cap and any risks that might affect its long-term performance.

Unlike basic comparisons with industry averages or close peers, the Fair Ratio offers a deeper perspective by adjusting for growth and risk factors specific to ONEOK’s situation. This results in a comparison that is more relevant to the company’s outlook and fundamentals.

Since ONEOK's current PE ratio of 14.8x is noticeably below its Fair Ratio, the stock appears undervalued based on this metric.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your ONEOK Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is your personal story or perspective on a company, giving context to the numbers behind your forecast. It is your own view of ONEOK’s possible future, including fair value and expectations for revenue or earnings growth.

Rather than just crunching data, Narratives connect a company’s fundamental story to specific financial forecasts and ultimately to its fair value. This approach transforms investing into something much more intuitive, making it easier to see why a stock’s price is rising or falling and what might happen next based on your assumptions.

Millions of investors use Narratives every day on Simply Wall St’s Community page, where you can quickly create or review Narratives shaped by the latest news, earnings results, or developments. You can also see in real time how they affect Fair Value and buy or sell decisions.

For example, some investors are optimistic about ONEOK’s global expansion and integration synergies, supporting future price targets as high as $126. Others are more cautious, setting conservative targets as low as $82 if they believe regulatory or commodity risks may undermine growth.

Do you think there's more to the story for ONEOK? Create your own Narrative to let the Community know!

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.

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