ONEOK Benefits From Fee-Based Earnings & Expansion Efforts

ONEOK Inc. OKE stands to benefit from higher fee-based earnings and midstream assets located in productive regions. The company also continues to gain from its organic initiatives and diverse customer base.However, this Zacks Rank #3 (Hold) company faces risks related to intense competition in the pipeline business and seasonality in its operations.Factors Acting in Favor of OKEWith production volumes resuming normalcy, ONEOK is poised to benefit from long-term fee-based commitments across all its segments. More than 88% of its 2024 earnings were fee-based. The company expects more than 90% of 2025 revenues to be fee-based.ONEOK has witnessed more than 16% growth in adjusted EBITDA over the past 11 years, and it continues to anticipate similar growth in the future. The company expects adjusted EBITDA in the range of $8-$8.45 billion for 2025.After completing the acquisition of Medallion Midstream from Global Infrastructure Partners in 2024, ONEOK completed another acquisition of EnLink Midstream, LLC, in January 2025. These strategic acquisitions are expected to produce considerable cost savings and synergies, further enhancing the profitability of the company.ONEOK also continues to invest in organic growth projects to expand within its existing operating regions and provide a broad range of services to crude oil and natural gas producers as well as end-use markets.Headwinds for OKEThe natural gas and natural gas liquids pipeline operators are expected to remain highly competitive. In addition to the existing pipeline companies, this midstream section has recently seen many energy companies form master limited partnerships to begin pipeline services. Although OKE’s assets are well spread out, its ability to withstand competitive challenges will depend on the efficiency, quality and reliability of its services.Some of its operations are highly seasonal, and revenues from these operations may fluctuate from one period to the next. Thus, during peak demands, prices might increase, affecting its operations.OKE Stock Price PerformanceIn the past month, shares of the company have risen 2% against the industry’s 0.8% decline. Image Source: Zacks Investment ResearchStocks to ConsiderSome better-ranked stocks for investors interested in the same industry are Plains All American Pipeline PAA and Delek Logistics Partners DKL, both sporting a Zacks Rank #1 (Strong Buy), and NextDecade NEXT, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for PAA’s 2025 earnings per unit indicates an increase of 1.3% year over year. The firm delivered an average earnings surprise of 3.5% in the trailing four quarters.Delek Logistics Partners has a long-term (three to five year) earnings growth rate of 11.32%. The Zacks Consensus Estimate for DKL’s 2025 earnings per unit indicates an increase of 34.5% year over year.The Zacks Consensus Estimate for NEXT’s 2025 earnings per share (EPS) indicates an increase of 56.5% year over year. The consensus mark for first-quarter 2025 EPS indicates an increase of 69.9% year over year. Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Plains All American Pipeline, L.P. (PAA): Free Stock Analysis Report ONEOK, Inc. (OKE): Free Stock Analysis Report Delek Logistics Partners, L.P. (DKL): Free Stock Analysis Report NextDecade Corporation (NEXT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks