Bearish stock to watch: ONEOK, Inc. (NYSE: OKE)

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ONEOK, Inc. (NYSE: OKE) stock fell over 2.2% on 25th Feb, 2020 pre-market session (Source: Google finance) after the company’s fourth quarter of FY 19 output. For the fiscal 2020, the company expects 16% increase of net income midpoint to $1.480 billion, 25% expected increase of adjusted EBITDA midpoint to $3.225 billion and 32% expected decline of growth capital midpoint to $2.490 billion.

ONEOK has reported 9% increase in the net income in the fourth quarter 2019 and 11% for the full year 2019, compared with the corresponding periods in 2018. Higher 2019 results were on the back of natural gas liquids (NGL) and natural gas volume growth, higher average fee rates in the natural gas liquids and natural gas gathering and processing segments and increased transportation services in the natural gas pipelines segment, compared to the full year 2018. OKE in the fourth quarter of FY 19 has reported the adjusted earnings per share of 77 cents, while reported the adjusted revenue of $2.66 billion in the fourth quarter of FY 19.

Additionally, the company is paying in February 2020 a quarterly dividend of 93.5 cents per share, or $3.74 per share on an annualized basis, which represents an increase of 9% compared to the same quarter in 2019.

In addition, in fiscal 2020, in natural gas liquids segment, 15% increase in NGL raw feed throughput volumes are anticipated to be driven by a full year of operations of the Elk Creek Pipeline and the completions of the Arbuckle II Pipeline, the MB-4 fractionator and the 80,000 bpd West Texas LPG pipeline expansion, all anticipated in the first quarter 2020. The continuous growth from plant connections and expansions completed in 2019 will also contribute to increased volumes in 2020. Six to nine new third-party natural gas processing plant connections or existing third-party plant expansions are anticipated and the connection of ONEOK’s Demicks Lake II plant. The earnings of the segment is projected to be more than 90% fee based. In fiscal 2020, in natural gas gathering & processing segment, 11% increase in natural gas volumes processed anticipated to be driven mainly by the completion of ONEOK’s Demicks Lake I and II processing plants.

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