TULSA, Okla. - ONE Gas, Inc. (NYSE: NYSE:OGS), currently valued at $4.23 billion by market capitalization, has released its financial guidance for the year 2025, projecting net income to range between $254 million and $261 million, with earnings per diluted share anticipated to be $4.20 to $4.32. According to InvestingPro data, five analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company's outlook. The utility company, which serves over 2.3 million customers across Kansas, Oklahoma, and Texas, also updated its five-year growth rates, signaling consistent expansion through 2029.
The company's 2025 financial outlook includes the positive impacts of new rates and customer growth, balanced against expected increases in operating expenses, such as employee-related costs, depreciation from capital investments, and interest expenses. With a beta of 0.68 and historically low price volatility, as highlighted by InvestingPro analysis, ONE Gas has demonstrated relative stability compared to the broader market. Capital investments for 2025 are forecasted at approximately $750 million, primarily for system integrity and replacement projects, with an additional $180 million earmarked for extensions to new customers, largely driven by growth in Texas and Oklahoma. The average rate base for 2025 is projected at $5.8 billion.
Looking ahead to the five-year period ending in 2029, ONE Gas anticipates capital investments, including asset removal costs, to be within $750 million to $850 million annually, totaling around $4.0 billion, which includes approximately $1.0 billion for growth capital. These expenditures are expected to support an estimated average rate base growth of 7% to 9% per year through 2029.
The company expects an average annual increase in net income and diluted earnings per share of 7% to 9% and 4% to 6%, respectively, aiming to be at the higher end of these ranges. Operating costs over the same period are predicted to rise by an average of approximately 4% per year, a decrease from the 5% annual increase projected in the 2024 guidance. ONE Gas also forecasts total net long-term financing needs of about $1.5 billion from 2025 to 2029, with roughly 40% anticipated to be equity.
In line with previous forecasts, ONE Gas plans to maintain an average annual dividend growth rate of 1% to 2% through 2029, subject to board approval, targeting a dividend payout ratio of 55% to 65% of net income. The company has maintained an impressive track record of raising its dividend for 11 consecutive years, currently offering a 3.48% yield. InvestingPro subscribers can access detailed dividend analysis and 12+ additional ProTips that provide deeper insights into ONE Gas's financial health and growth potential through comprehensive Pro Research Reports.
The company has outstanding forward sale agreements for approximately 3.6 million shares of its common stock at an average price of around $77 per share. It expects to settle about $245 million of its outstanding equity under forward sale agreements at the end of 2024, with approximately $30 million set to be settled in 2025.
ONE Gas will hold a conference call to discuss these financial projections on Thursday, December 5, 2024. The information provided is based on a press release statement, and the company cautions that forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations.
In other recent news, ONE Gas Inc. has announced an increase in its earnings per share (EPS) guidance for 2024, despite a challenging market and a decrease in net income compared to the previous year. This announcement was made during their recent third-quarter earnings call, where the company reported meeting its expected financial targets. The company's CEO, Sid McAnnally, and CFO, Chris Sighinolfi, also discussed the impact of Federal Reserve rate cuts on their financial strategy.
Among the highlights were the company's quarterly expectations being met and the EPS guidance for 2024 being raised to $3.85-$3.95. The company also reported a third-quarter net income of $19.3 million, down from $25.2 million year-over-year. In regulatory news, the Kansas rate case resulted in a $35 million revenue increase starting November 1, and a Texas settlement is pending, expected to take effect in December.
These are among the recent developments for ONE Gas, reflecting its continued operational execution and customer growth. The company's financial strategy has been influenced by the Federal Reserve's balance sheet normalization and it anticipates a 100 basis points reduction in interest rates by 2025. Despite higher interest expenses and labor costs leading to decreased net income and housing market challenges, ONE Gas maintains an optimistic outlook for the future.
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