ONE Gas (OGS) is back in focus after recent commentary grouped it with Atmos Energy and MDU Resources as a potential beneficiary of rising US natural gas demand and continued infrastructure investment across regulated utility networks.
Over the past year, ONE Gas has paired a 10.36% total shareholder return with relatively steady trading. The share price sits at $80.41, and recent modest earnings estimate upgrades and infrastructure spending plans have helped frame the stock as a measured way to participate in rising US natural gas demand.
Scan for other regulated utility stocks positioned around similar natural gas themes by checking our hand picked 38 power grid technology and infrastructure stocks .
ONE Gas now trades meaningfully below the average analyst target, while internal valuation work points to a premium to today's price. Where does a reasonable fair value range actually land for this stock after its recent steady run?
Most Popular Narrative: 10.9% Undervalued
The most followed narrative for ONE Gas places fair value at $90.22, compared with the last close at $80.41, framing the stock as modestly below that assessed range.
Accelerating capital investment in system reinforcement and modernization (such as the Austin system project), in response to both safety and demand, expands the regulated rate base, resulting in higher allowed returns and EPS growth.
Read the complete narrative. Read the complete narrative.
Want to see what is built into that $90.22 figure? The narrative leans heavily on steady revenue expansion, firmer margins, and a richer future earnings multiple.
Result: Fair Value of $90.22 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, ONE Gas still faces meaningful risks if capital spending outpaces regulatory recovery or if inflation driven operating costs pressure margins and weaken the current fair value case.
Find out about the key risks to this ONE Gas narrative.
Another View on ONE Gas Using Market Multiples
The first fair value narrative for ONE Gas leans on long term earnings forecasts and a higher future P/E. A simpler cross check uses today's P/E of 17.5x, which is richer than the global gas utilities group at 13.5x and peers at 14.3x, but below an estimated fair ratio of 19.1x.
That mix of higher pricing than industry and peers, yet a discount to the fair ratio, points to balanced valuation risk. The stock is not obviously cheap or stretched on this lens. For investors, the question is which reference point matters most over the next few years.
For a closer look at how this compares with other utilities, review the full breakdown in See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
Comfortable with the mixed sentiment around ONE Gas so far, or want to check the details yourself and move quickly while the data is fresh? To weigh up both the concerns and the potential upside in one place, review the 3 key rewards and 2 important warning signs
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include OGS .
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