ONEOK's (NYSE:OKE) Share Price Drops 27.5%: Is Now the Time to Buy?
ONEOK's (NYSE:OKE) share price has taken a 27.5% hit this year, sparking interest in the company's prospects. The midstream energy giant, known for its stable cash flows and investment-grade balance sheet, is seen as a solid portfolio addition but not an urgent 'Buy-the-Dip' opportunity.
ONEOK's share price is sensitive to real interest rates, acting as an inflation hedge and providing diversification benefits. However, its revenue is not entirely immune to commodity price fluctuations. A decline in oil and gas prices can impact pipeline utilization and shift price risk to the company.
ONEOK management prioritizes adjusted EBITDA as their key performance indicator, with this year's figure up 22.5%. However, EPS has declined by 1.65% in the first half of 2025, partly due to dilution and interest expense from recent acquisitions. ONEOK has missed Wall Street's adjusted EPS estimates five times in the past eight quarters.
The company's valuation multiples have reset this year, with its current P/E ratio and EV/EBITDA in line with its peer group. Despite acquisitions increasing revenue and adjusted EBITDA, they have yet to generate meaningful returns to shareholders.
ONEOK's share price decline this year, driven by disappointing EPS performance and valuation correction, has raised questions about the company's prospects. While its stable cash flows and investment-grade balance sheet remain attractive, the company's recent acquisitions have yet to translate into meaningful shareholder returns. Investors should consider these factors when evaluating ONEOK as a potential portfolio addition.
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