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Is a Beat in the Cards for ONEOK (OKE) in Q1 Earnings?

We expect ONEOK, Inc. OKE to beat expectations when it reports first-quarter 2017 results after the closing bell on May 2. Last quarter, this gas distribution company posted a negative earnings surprise of 8.51%.
Why a Likely Positive Surprise?

Our proven model shows that ONEOK is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates and ONEOK has the right mix. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Earnings ESP is 4.35%, which represents the difference between the Most Accurate estimate of 48 cents and the Zacks Consensus Estimate of 46 cents.

Zacks Rank: ONEOK’s carries a Zacks Rank #3. The combination of ONEOK’s favorable Zacks Rank and positive ESP makes us reasonably confident of a positive surprise this season.

Conversely, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

ONEOK, Inc. Price, Consensus and EPS Surprise


Factors to Consider

Nearly 90% of ONEOK earnings in 2017 will be generated from fee based contracts compared with 85% in 2016. The higher fee based contracts will assure a stable margin throughout the year.

The lower breakeven production costs is resulting in more drilling activity in the STACK and SCOOP plays in Oklahoma, and the Williston and Permian basins, which is anticipated to benefit the company owing to its well positioned assets in the region.

Extreme weather condition had an adversely impact on operation in Williston Basin during January, however, February volumes have grown significantly.

Other Stocks to Consider

You can also consider a few players in the Zacks categorized utility sector that too have the right combination of elements to post an earnings beat this quarter.

UGI Corporation UGI has an Earnings ESP of +1.56% and a Zacks Rank #3. The company is expected to release first-quarter 2017 results after the market closes on May 1.

PPL Corporation PPL has an Earnings ESP of +1.61% and a Zacks Rank #3. The company is expected to release first-quarter 2017 results on May 4, before the opening bell.

NiSource, Inc NI has an Earnings ESP of +3.08% and a Zacks Rank #2. The company is expected to release first-quarter 2017 results on May 3, before the market opens. You can see the complete list of today’s Zacks #1 Rank stocks here.

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NiSource, Inc (NI): Free Stock Analysis Report
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