ONEOK, Inc. (NYSE: OKE) is a leading energy midstream service provider in the United States connecting prolific supply basins with key market centers. The company owns and operates natural gas liquids, and is engaged in the whole process of gathering , processing , storage and transportation of natural gas, which means it's more diverse versus other companies in its sector.
1) The company has reported very strong financial results in the 3d quoter 2020.
Pre-tax Margins went up by 16.24% and Net- Profit Margin went up by 12.58%
2) The company has a very good dividend policy, current Div. Yield is 10.43%,
3) On Nov. 23, 2020 ONEOK, Inc. (NYSE: OKE) announced its inclusion in the Dow Jones Sustainability World Index (DJSI World) and Dow Jones Sustainability North America Index (DJSI North America).
In addition, ONEOK was named the DJSI Industry Leader for Oil and Gas Storage and Transportation. This marks ONEOK's first inclusion in the DJSI World Index, where it is currently the only North American energy company included in the group of global sustainability leaders.
4) Undervalued in the current market conditions based on the financial data: with a current price of $ 35.87, the stock is indeed trading at 10.30% below our estimate price of $39.98.
The key area to consider for potential risks are:
1) The Company can incur in Cash Flow problems during the next waves of COVID-19. So far , the company has been able to recover sustainably, however there is no guarantee it will continue the same way.
2) Tight Dividend coverage ration, meaning if the situation will become worse, its more susceptible to a partial dividend cut.
To conclude, we expect the company to continue driving strong shareholder rewards and keep its strong market position.
Overall, the company is a valuable investment opportunity and its worth considering adding it to an optimal risk portfolio.
OTB Global Investments
London, 3 December 2020