ONEOK Benefits From Strategic Acquisitions & Fee-Based Earnings

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 a diverse customer base.However, this Zacks Rank #2 (Buy) company faces risks related to intense competition in the pipeline business.OKE’s TailwindsWith production volumes resuming normalcy, ONEOK is poised to benefit from long-term fee-based commitments in all three of its segments. The company expects more than 90% of 2024 revenues to be fee-based.ONEOK has witnessed more than 15% growth in adjusted EBITDA during the past 10 years and continues to expect the same in the future. The company has raised its expectation for adjusted EBITDA to the band of $6.53-$6.73 billion from the previously guided range of $6.03-$6.33 billion. As production volumes continue to improve in its service areas, OKE expects to perform better in the long run.In October 2024, ONEOK completed the acquisition of Medallion Midstream from Global Infrastructure Partners for a total cash consideration of nearly $2.6 billion. This acquisition further diversifies ONEOK's asset portfolio and adds an expansive and well-connected crude oil gathering system to its Permian Basin platform. The company’s strategic acquisitions are expected to produce considerable cost savings and synergies, further enhancing its profitability.Over the past five years, Natural Gas Liquid volumes from the Rocky Mountain region have grown at more than 20% annual rate and natural gas processing volumes have increased at a 10% annual growth rate.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 such operations may fluctuate from time to time.OKE’s Price PerformanceIn the past six months, shares of the company have risen 26.2% compared with the industry’s 14.8% growth. Image Source: Zacks Investment ResearchOther Stocks to ConsiderSome other top-ranked stocks for investors interested in the same sector are Plains All American Pipeline PAA, sporting a Zacks Rank #1 (Strong Buy), and Constellation Energy Corporation CEG and NextDecade NEXT, both carrying a Zacks Rank #2 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 18.6% year over year. The firm delivered an average earnings surprise of 7.2% in the trailing four quarters.Constellation Energy has a long-term (three to five year) earnings growth rate of 17.47%. The Zacks Consensus Estimate for CEG’s 2025 earnings per share (EPS) indicates an increase of 9.9% year over year.The Zacks Consensus Estimate for NEXT’s 2024 EPS indicates an increase of 54% year over year. The consensus mark for 2025 EPS indicates a decrease of 61.1% year over year. Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. This aggressive transition could mean tremendous profits for nuclear-related stocks – and investors who get in on the action early enough.Our urgent report, Atomic Opportunity: Nuclear Energy's Comeback, explores the key players and technologies driving this opportunity, including 3 standout stocks poised to benefit the most.Download Atomic Opportunity: Nuclear Energy's Comeback free today.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 Constellation Energy Corporation (CEG): Free Stock Analysis Report Plains All American Pipeline, L.P. (PAA): Free Stock Analysis Report ONEOK, Inc. (OKE): Free Stock Analysis Report NextDecade Corporation (NEXT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks