Is ONE Gas Still Attractive After Its 18% 2025 Rally?

• Wondering if ONE Gas is still good value after its latest run higher, or whether the easy money has already been made? This breakdown is designed to help you decide if the current price really makes sense.
• The stock is up 18.0% year to date and 11.6% over the past year, even after a recent 3.3% pullback in the last week and a modest 1.0% dip over the past month, which suggests investors are still broadly optimistic but increasingly selective on price.
• Recent attention around regulated utilities, changing rate expectations and the search for steady dividend names has put companies like ONE Gas back on the radar for investors looking for defensive growth, especially as markets reprice interest rate and inflation risks. At the same time, sector wide debates on infrastructure spending and regulatory frameworks are nudging investors to look more closely at what they are actually paying for future cash flows.
• Right now, ONE Gas scores just 1 out of 6 on our undervaluation checks, which suggests some parts of the market may be pricing the stock a bit richly, at least on traditional metrics. Next, we will unpack how different valuation approaches view ONE Gas at this level, and later in the article we will explore a more powerful way to think about valuation that goes beyond a single score.

ONE Gas scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: ONE Gas Dividend Discount Model (DDM) Analysis

The Dividend Discount Model estimates what a stock is worth by projecting all future dividends a company is expected to pay, then discounting them back to today. It is especially useful for regulated utilities like ONE Gas, where dividends are a key part of total returns.

For ONE Gas, the model uses an annual dividend per share of $2.77 in USD, a return on equity of about 8.5%, and a payout ratio of roughly 62%. That implies the company is reinvesting close to 38% of its earnings, driving an expected dividend growth rate of about 3.2% a year, calculated from retained earnings multiplied by ROE. In other words, the DDM assumes modest, steady growth in the dividend stream over time.

Based on these inputs, the DDM arrives at an intrinsic value of about $73.92 per share. This suggests ONE Gas is roughly 9.2% overvalued compared with its current market price, placing it just outside the fair value band.

Result: ABOUT RIGHT

ONE Gas is fairly valued according to our Dividend Discount Model (DDM), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

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

Approach 2: ONE Gas Price vs Earnings

For profitable, mature companies like ONE Gas, the price to earnings ratio is a straightforward way to judge whether investors are paying a reasonable price for each dollar of earnings. It also conveniently captures what the market thinks about the company’s growth prospects and risk profile, since faster growth and lower risk usually justify a higher, or more generous, PE multiple.

ONE Gas currently trades on a PE of about 19.0x, which is slightly above both the Gas Utilities industry average of around 14.1x and the broader peer group average of roughly 18.0x. On the surface, that suggests investors are willing to pay a small premium relative to many of its listed peers. Simply Wall St’s Fair Ratio, however, goes a step further by estimating what PE multiple would make sense for ONE Gas given its specific earnings growth outlook, industry, profit margins, market value and risk profile.

On this basis, ONE Gas has a Fair Ratio of about 20.3x, which sits modestly above the current 19.0x market multiple. That implies the stock is trading a little below where it could be valued based on its fundamentals.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1440 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your ONE Gas Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simple stories investors create on Simply Wall St’s Community page that connect their view of a company’s future revenues, earnings and margins to a clear financial forecast, a calculated fair value, and a practical buy or sell signal. This is done by comparing that fair value to today’s price, and everything then updates automatically as new news or earnings arrive. For ONE Gas, one investor might build a bullish Narrative expecting supportive Texas regulation, steady customer additions and expanding margins that justify a fair value closer to the high end of recent targets near $89. Another might craft a more cautious Narrative focused on regulatory risk, high capex and decarbonization headwinds that leads to a fair value nearer $66. The platform lets you see and stress test both perspectives so you can quickly decide which story, and which price, makes the most sense for you.

Do you think there's more to the story for ONE Gas? Head over to our Community to see what others are saying!

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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