Gabelli Starts ONE Gas Inc. (OGS) at Hold

February 3, 2014 9:30 AM EST
Get Alerts OGS Hot Sheet
Price: $63.69 +0.86%

Rating Summary:
    0 Buy, 7 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 30 | Down: 30 | New: 23
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Gabelli initiated coverage on ONE Gas Inc. (NYSE: OGS) with a Hold rating.

Analyst Timothy M. Winter said, "We consider ONE Gas to be a low-risk, high quality, pure-play regulated utility with healthy earnings and dividend growth potential. Shares offer a 3.3% current return on the indicated $1.12 annual dividend, which we consider secure and growing. Based on management 2014 earnings guidance of $1.83-2.04 per share (trailing-twelve months earnings of $2.12 per share), the initial payout ratio would be 58% and management plans to maintain a target dividend payout ratio of range of 55-65% of recurring earnings. Given our expectation for 5% annual earnings growth, we expect OGS shares to provide investors with a low-risk 8.4% total return potential."

"Following decades of consolidation, there are only a select number of pure-play regulated local gas distribution companies (LDCs) remaining. We have included the primarily regulated LDC’s in Table 2 and compare OGS valuation metrics with this peer group. Based on a $34.12 share price, OGS trades at 16.6x, 17.5x and 16.6x our 2013- 2015 earnings estimates, which compares to the peer group multiples of 18.5x, 17.3x, and 16.5x, respectively. OGS trades at 136% of book value which is a modes discount to the peer group median of 183%," he added.

For an analyst ratings summary and ratings history on ONE Gas Inc. click here. For more ratings news on ONE Gas Inc. click here.

Shares of ONE Gas Inc. closed at $34.12 yesterday.

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