ONE Gas, Inc. (NYSE:OGS), a natural gas distributor with a market capitalization of $3.95 billion, has entered into amendments to its forward sale agreements that will result in the settlement and issuance of shares of its common stock, the company disclosed in a regulatory filing today. According to InvestingPro analysis, the company currently appears overvalued at its current price of $69.56.
The Tulsa, Oklahoma-based natural gas distributor announced that it amended its existing forward sale agreements with Bank of America (NYSE:BAC), N.A., originally dated September 11 and September 15, 2023. The amendments specify a settlement date of December 31, 2025, for the shares under the agreements, with the option for the company to settle earlier if it chooses.
The company expects to settle and issue 2,234,000 shares of its common stock on or before today, in accordance with the terms of the amended agreements. Additionally, in relation to a separate transaction with RBC Capital Markets, LLC, acting as an agent for Royal Bank of Canada, ONE Gas is set to settle and issue 926,465 shares of common stock on or before today.
These transactions are part of ONE Gas's broader financial strategy, as outlined in the SEC Form 8-K filed on December 27, 2024. The company's common stock is listed on the New York Stock Exchange under the ticker symbol OGS.
The issuance of common stock through the settlement of forward sale agreements is a financial maneuver that companies like ONE Gas use for various strategic purposes, including capital raising and hedging. The company has not disclosed any specific use of proceeds from the expected settlements. InvestingPro data reveals that ONE Gas operates with a significant debt burden of $3.37 billion and a concerning current ratio of 0.5, indicating potential liquidity challenges.
This news comes as ONE Gas continues to operate within the natural gas distribution sector, classified under the Standard Industrial Classification code 4924. Despite these challenges, the company maintains an attractive dividend yield of 3.77% and has raised its dividend for 11 consecutive years. The information provided is based on the company's press release statement filed with the SEC.
For a comprehensive analysis of ONE Gas's financial health and future prospects, including additional ProTips and detailed metrics, investors can access the full research report on InvestingPro.
In other recent news, ONE Gas Inc. has experienced a series of significant developments. Jefferies initiated coverage on ONE Gas, setting a price target of $79 and attributing the company's stability to its strong balance sheet and regulatory outlook.
Despite this, Jefferies maintains a Hold rating due to the company's below-average normalized EPS growth. This was followed by Ladenburg Thalmann downgrading ONE Gas from Buy to Neutral and lowering its price target to $75.50 in response to ONE Gas's updated earnings base presented in its 2025 guidance call.
Additionally, Mizuho (NYSE:MFG) Securities raised its price target for ONE Gas to $77, citing the company's stronger-than-expected projection for 2025. Stifel also increased ONE Gas's price target to $74, following the company's guidance that exceeded analysts' expectations. This is largely due to the company's confidence in achieving the upper end of its five-year EPS guidance range, set at 4-6%.
In terms of future growth, ONE Gas projects steady expansion and significant capital investments through 2029. The company anticipates a net income ranging between $254 million and $261 million by 2025, with earnings per diluted share expected to be $4.20 to $4.32. This positive outlook is supported by five analysts who have recently revised their earnings estimates upward.
Capital investments for 2025 are forecasted at approximately $750 million, primarily for system integrity and replacement projects. These recent developments reflect ONE Gas's ongoing operational execution and growth, as well as its adaptive approach to changing economic conditions.
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