A look at ONE Gas’s valuation after its new $120 million pipeline joint project announcement

ONE Gas (OGS) just put fresh attention on its stock with a joint infrastructure project in southeast Oklahoma, committing about $120 million to a new natural gas pipeline feeding Western Farmers Electric Cooperative.

See our latest analysis for ONE Gas.

That backdrop helps explain why, even after a recent 1 month share price return of negative 6.5 percent, ONE Gas still shows a year to date share price return of 13.4 percent and a 1 year total shareholder return of 16.9 percent. This suggests steady, if unspectacular, momentum supported by regulated growth and its latest pipeline commitment.

If this kind of steady utility story appeals but you want more ideas, it is worth exploring other regulated and infrastructure focused names through fast growing stocks with high insider ownership.

But with shares already up double digits this year, trading only modestly below analyst targets and reflecting steady earnings growth, is ONE Gas quietly undervalued or is the market already baking in years of regulated expansion?

Most Popular Narrative: 8.6% Undervalued

With ONE Gas last closing at $77.53 against a narrative fair value just under $85, the story leans toward modest upside built on regulated growth.

Accelerating capital investment in system reinforcement and modernization (such as the Austin system project), in response to both safety and demand, expands the regulated rate base, resulting in higher allowed returns and EPS growth.

Read the complete narrative.

Want to see what kind of earnings trajectory and margin lift could justify paying a premium utility multiple here? The narrative quietly leans on steady, compounding growth assumptions that might surprise cautious income investors. Curious which profitability and valuation levers really drive that near double digit upside call? Dive in to see how every turn of the rate base math shapes this fair value.

Result: Fair Value of $84.86 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained high capital spending and any setback in supportive Texas legislation could tighten free cash flow and challenge today’s steady growth expectations.

Find out about the key risks to this ONE Gas narrative.

Another Lens On Value

Our SWS DCF model paints a cooler picture, putting fair value nearer $73.92, which would leave OGS looking slightly overvalued at $77.53. That is a stark contrast to the narrative upside and raises the question: are analysts leaning too hard on rate base growth staying flawless?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out ONE Gas for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 914 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own ONE Gas Narrative

If you see the story differently or want to stress test the assumptions with your own research, you can build a custom view in minutes: Do it your way.

A great starting point for your ONE Gas research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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