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Stock Strategist

Oneok's Positioned to Outperform

It simplified its corporate structure with a midsummer merger.

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We recently increased our fair value estimate for  Oneok (OKE) after updating our model to incorporate the simplification transaction, associated tax benefits, and anticipated earnings uplift from an ethane recovery.

Our new fair value estimate implies a 2018 EBITDA multiple of 12 times and a 2018 distribution yield of 4.6%. We expect the main driver for Oneok will be natural gas liquids, specifically a recovery in the ethane market as new plant capacity comes on line in the next few years.

Stephen Ellis does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.