20230119INT to Staff Attachment - Response to No. 56_Attachment 1.pdf

200
160
100
80
6050
40
30
20
Percent
shares
traded
24
16
8
Target Price Range
2025 2026 2027
ATMOS ENERGY CORP.NYSE-ATO 117.39 20.2 21.3
20.0 1.22 2.5%
TIMELINESS 2 Raised 8/19/22
SAFETY 1 Raised 6/6/14
TECHNICAL 2 Lowered 6/10/22
BETA .80 (1.00 = Market)
18-Month Target Price Range
Low-High Midpoint (% to Mid)
$86-$139 $113 (-5%)
2025-27 PROJECTIONSAnn’l TotalPrice Gain Return
High 160 (+35%)10%Low 130 (+10%)5%
Institutional Decisions
3Q2021 4Q2021 1Q2022
to Buy 262 305 315to Sell 217 223 221Hld’s(000)114371 120194 126318
High: 35.6 37.3 47.4 58.2 64.8 82.0 93.6 100.8 115.2 121.1 105.3 123.0
Low: 28.5 30.4 34.9 44.2 50.8 60.0 72.5 76.5 89.2 77.9 84.6 99.8
% TOT. RETURN 7/22
THIS VL ARITH.*
STOCK INDEX
1 yr. 26.4 -8.2
3 yr. 19.1 40.3
5 yr. 56.2 56.9
CAPITAL STRUCTURE as of 6/30/22
Total Debt $7960.6 mill.Due in 5 Yrs $2410.0 mill.
LT Debt $5759.2 mill.LT Interest $85.0 mill.
(LT interest earned: 10.8x; total interest
coverage: 10.8x)
Leases, UncapitalizedAnnual rentals $41.8 mill.
Pfd Stock None
Pension Assets-9/21$596.8 mill.
Oblig.$596.0 mill.
Common Stock 139,891,918 shs.
as of 7/29/22
MARKET CAP: $16.4 billion (Large Cap)
CURRENT POSITION 2020 2021 6/30/22
($MILL.)Cash Assets 20.8 116.7 328.1Other 450.5 2722.0 2953.8
Current Assets 471.3 2838.7 3281.9
Accts Payable 235.8 423.2 397.1Debt Due .2 2400.5 2201.4
Other 546.4 686.7 660.6
Current Liab. 782.4 3510.4 3259.1
Fix. Chg. Cov. 1306% 1457% 1450%
ANNUAL RATES Past Past Est’d ’19-’21
of change (per sh)10 Yrs. 5 Yrs. to ’25-’27
Revenues -7.5% -10.0%6.5%
‘‘Cash Flow’’ 6.0% 7.0%7.0%Earnings 8.5% 8.5%7.5%
Dividends 5.5% 8.0%7.0%Book Value 8.5% 11.0%7.5%
FiscalYearEnds
FullFiscalYear
QUARTERLY REVENUES ($ mill.)A
Dec.31 Mar.31 Jun.30 Sep.30
2019 877.8 1094.6 485.7 443.7 2901.8
2020 875.6 977.6 493.0 474.9 2821.1
2021 914.5 1319.1 605.6 568.3 3407.5
2022 1012.8 1649.8 816.4 621 4100
2023 1115 1740 905 640 4400
FiscalYearEnds
FullFiscalYear
EARNINGS PER SHARE A B E
Dec.31 Mar.31 Jun.30 Sep.30
2019 1.38 1.82 .68 .49 4.35
2020 1.47 1.95 .79 .53 4.72
2021 1.71 2.30 .78 .37 5.12
2022 1.86 2.37 .92 .45 5.60
2023 2.02 2.43 1.01 .54 6.00
Cal- Full
endar Year
QUARTERLY DIVIDENDS PAID C■
Mar.31 Jun.30 Sep.30 Dec.31
2018 .485 .485 .485 .525 1.98
2019 .525 .525 .525 .575 2.15
2020 .575 .575 .575 .625 2.35
2021 .625 .625 .625 .68 2.56
2022 .68 .68 .68
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
75.27 66.03 79.52 53.69 53.12 48.15 38.10 42.88 49.22 40.82 32.23 26.01 28.00 24.32
4.26 4.14 4.19 4.29 4.64 4.72 4.76 5.14 5.42 5.81 6.19 6.62 7.24 7.57
2.00 1.94 2.00 1.97 2.16 2.26 2.10 2.50 2.96 3.09 3.38 3.60 4.00 4.35
1.26 1.28 1.30 1.32 1.34 1.36 1.38 1.40 1.48 1.56 1.68 1.80 1.94 2.10
5.20 4.39 5.20 5.51 6.02 6.90 8.12 9.32 8.32 9.61 10.46 10.72 13.19 14.19
20.16 22.01 22.60 23.52 24.16 24.98 26.14 28.47 30.74 31.48 33.32 36.74 42.87 48.18
81.74 89.33 90.81 92.55 90.16 90.30 90.24 90.64 100.39 101.48 103.93 106.10 111.27 119.34
13.5 15.9 13.6 12.5 13.2 14.4 15.9 15.9 16.1 17.5 20.8 22.0 21.7 23.2
.73 .84 .82 .83 .84 .90 1.01 .89 .85 .88 1.09 1.11 1.17 1.24
4.7% 4.2% 4.8% 5.3% 4.7% 4.2% 4.1% 3.5% 3.1% 2.9% 2.4% 2.3% 2.2% 2.1%
3438.5 3886.3 4940.9 4142.1 3349.9 2759.7 3115.5 2901.8
192.2 230.7 289.8 315.1 350.1 382.7 444.3 511.4
33.8% 38.2% 39.2% 38.3% 36.4% 36.6% 27.0% 21.4%
5.6% 5.9% 5.9% 7.6% 10.5% 13.9% 14.3% 17.6%
45.3% 48.8% 44.3% 43.5% 38.7% 44.0% 34.3% 38.0%
54.7% 51.2% 55.7% 56.5% 61.3% 56.0% 65.7% 62.0%
4315.5 5036.1 5542.2 5650.2 5651.8 6965.7 7263.6 9279.7
5475.6 6030.7 6725.9 7430.6 8280.5 9259.2 10371 11788
6.1% 5.9% 6.4% 6.6% 7.2% 6.4% 6.9% 6.1%
8.1% 8.9% 9.4% 9.9% 10.1% 9.8% 9.3% 8.9%
8.1% 8.9% 9.4% 9.9% 10.1% 9.8% 9.3% 8.9%
2.8% 4.0% 4.7% 4.9% 5.1% 4.9% 4.8% 4.6%
65% 56% 50% 51% 50% 50% 48% 48%
2020 2021 2022 2023 ©VALUE LINE PUB. LLC 25-27
22.41 25.73 28.85 30.15 Revenues per sh A 35.50
8.03 8.64 9.20 9.90 ‘‘Cash Flow’’ per sh 11.95
4.72 5.12 5.60 6.00 Earnings per sh AB 7.30
2.30 2.50 2.72 2.92 Div’ds Decl’d per shC■3.50
15.38 14.87 17.25 17.10 Cap’l Spending per sh 18.00
53.95 59.71 65.85 68.20 Book Value per sh 82.85
125.88 132.42 142.00 146.00 Common Shs Outst’gD 155.00
22.3 18.8 Bold figures are
Value Line
estimates
Avg Ann’l P/E Ratio 20.0
1.15 1.00 Relative P/E Ratio 1.10
2.2% 2.6%Avg Ann’l Div’d Yield 2.4%
2821.1 3407.5 4100 4400 Revenues ($mill)A 6000
580.5 665.6 780 870 Net Profit ($mill)1130
19.5% 18.8%8.5% 17.5%Income Tax Rate 25.0%
20.6% 19.5%19.0% 19.8%Net Profit Margin 18.8%
40.0% 38.4%38.5% 40.0%Long-Term Debt Ratio 40.0%
60.0% 61.6%61.5% 60.0%Common Equity Ratio 60.0%
11323 12837 15200 16600 Total Capital ($mill)21400
13355 15064 17300 18700 Net Plant ($mill)24000
5.5% 5.5%6.5% 6.5%Return on Total Cap’l 6.5%
8.5% 8.4%8.5% 8.5%Return on Shr. Equity 9.0%
8.5% 8.4%8.5% 8.5%Return on Com Equity 9.0%
4.4% 4.3%4.0% 4.5%Retained to Com Eq 4.5%
49% 49%50% 49%All Div’ds to Net Prof 48%
Company’s Financial Strength A+
Stock’s Price Stability 95
Price Growth Persistence 80Earnings Predictability 100
(A)Fiscal year ends Sept. 30th.(B)Diluted
shrs. Excl. nonrec. gains (loss): ’10, 5¢; ’11,
(1¢); ’18, $1.43; ’20, 17¢. Excludes discontin-ued operations: ’11, 10¢; ’12, 27¢; ’13, 14¢;
’17, 13¢. Next egs. rpt. due early Nov.
(C)Dividends historically paid in early March,
June, Sept., and Dec.■Div. reinvestment plan.Direct stock purchase plan avail.
(D)In millions.
(E)Qtrs may not add due to change in shrs
outstanding.
BUSINESS:Atmos Energy Corporation is engaged primarily in the
distribution and sale of natural gas to over three million customers
through six regulated natural gas utility operations: Louisiana Divi-
sion, West Texas Division, Mid-Tex Division, Mississippi Division,
Colorado-Kansas Division, and Kentucky/Mid-States Division. Gas
sales breakdown for fiscal 2021: 67.9%, residential; 26.8%, com-
mercial; 3.6%, industrial; and 1.7% other. The company sold Atmos
Energy Marketing, 1/17. Officers and directors own approximately
.9% of common stock (12/21 Proxy). President and Chief Executive
Officer: Kevin Akers. Incorporated: Texas. Address: Three Lincoln
Centre, Suite 1800, 5430 LBJ Freeway, Dallas, Texas 75240. Tele-
phone: [phone]. Internet: www.atmosenergy.com.
Atmos Energy seems to be on track to
a solid fiscal 2022 (which concludes
on September 30th).Through the first
nine months, share net of $5.15 was 7.5%
higher than last year’s $4.79 figure. This
was made possible partially by the distri-
bution division, aided by favorable rate
case outcomes and an expanded customer
base. Too, results of the pipeline and
storage unit benefited from GRIP filings
approved in May, 2021 and May, 2022. A
significantly reduced effective income tax
rate also helped the company. So, if there
are no major setbacks in the fourth
quarter, Atmos’ full-year profits might rise
around 10%, to $5.60 a share, compared to
fiscal 2021’s $5.12 total. Concerning next
year, share net stands to increase another
7%, to $6.00, assuming additional expan-
sion of operating margins.
There’s adequate liquidity to meet
various commitments for quite a
while.When the third quarter ended,
cash and equivalents sat at $328.1 million.
Furthermore, long-term debt was rea-
sonable (roughly 38% of total capital) and
short-term obligations did not seem to be a
major obstacle. Also, $2.2 billion in com-
mon stock and/or debt securities remained
available for issuance (out of $5 billion)
under a shelf registration statement expir-
ing in June, 2024. Finally, Atmos Energy
can access four revolving credit facilities
totaling $2.5 billion plus a $1.5 billion
commercial paper program.
We think good things are in store for
the company over the 2025-2027 span.
It ranks as one of the country’s biggest
natural gas-only distributors, with more
than three million customers across
several states, including Texas, Louisiana,
and Mississippi. Too, the pipeline and
storage segment seems to have promising
overall growth opportunities, given that it
operates in one of the most-active drilling
regions in the world. The sound balance
sheet is another plus.
The top-quality stock offers unexcit-
ing long-term total return potential.
Capital appreciation possibilities are un-
derwhelming. Moreover, the dividend yield
is lower than the average of Value Line’s
Natural Gas Utility group. But these
shares are ranked 2 (Above Average) for
Timeliness.
Frederick L. Harris, III August 26, 2022
LEGENDS36.50 x Dividends p sh. . . .Relative Price StrengthOptions: YesShaded area indicates recession
© 2022 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber’s own, non-commercial, internal use. No partof it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.To subscribe call 1-800-VALUELINE
RECENT
PRICE
P/E
RATIO
RELATIVE
P/E RATIO
DIV’D
YLD( )Trailing:
Median:
VALUE
LINE
80
60
50
40
3025
20
15
10
7.5
Percent
shares
traded
30
20
10
E
Target Price Range
2025 2026 2027
NISOURCE INC.NYSE-NI 31.36 20.9 22.9
21.0 1.30 3.0%
TIMELINESS 4 Raised 3/11/22
SAFETY 3 Lowered 3/19/21
TECHNICAL 2 Raised 8/19/22
BETA .85 (1.00 = Market)
18-Month Target Price Range
Low-High Midpoint (% to Mid)
$25-$39 $32 (0%)
2025-27 PROJECTIONSAnn’l TotalPrice Gain Return
High 50 (+60%)15%Low 35 (+10%)6%
Institutional Decisions
3Q2021 4Q2021 1Q2022
to Buy 230 293 266to Sell 208 170 235Hld’s(000)376481 377935 381604
High: 24.0 26.2 33.5 44.9 49.2 26.9 27.8 28.1 30.7 30.5 27.8 32.6
Low: 17.7 22.3 24.8 32.1 16.0 19.0 21.7 22.4 24.7 19.6 21.1 26.4
% TOT. RETURN 7/22
THIS VL ARITH.*
STOCK INDEX
1 yr. 26.8 -8.2
3 yr. 12.3 40.3
5 yr. 35.8 56.9
CAPITAL STRUCTURE as of 6/30/22
Total Debt $10112.5 mill.Due in 5 Yrs $1318 mill.
LT Debt $9520.2 mill.LT Interest $336 mill.
(Interest cov. earned: 2.2x) (58% of Cap’l)
Leases, UncapitalizedAnnual rentals $32.7 mill.
Pension Assets-12/21 $1.9 bill.Oblig.$2.0 bill.
Pfd Stock $1547 mill.Pfd Div’d $55.1 mill.
Common Stock 405,952,999 shs.
as of 7/26/22
MARKET CAP: $12.7 billion (Large Cap)
CURRENT POSITION 2020 2021 6/30/22($MILL.)Cash Assets 116.5 85.2 77.8
Other 1542.9 1835.6 1833.9
Current Assets 1659.4 1920.8 1911.7
Accts Payable 589.0 697.8 650.3
Debt Due 526.3 618.1 592.3Other 1164.1 1430.3 1772.4
Current Liab. 2279.4 2746.2 3015.0
Fix. Chg. Cov. 250% 250% 255%
ANNUAL RATES Past Past Est’d ’19-’21
of change (per sh)10 Yrs. 5 Yrs. to ’25-’27
Revenues -6.0% -5.0%5.5%‘‘Cash Flow’’ .5% 2.0%5.5%
Earnings 3.0% 4.0%9.5%Dividends -1.0% - -4.5%
Book Value -3.0% -2.5%5.0%
Cal- Full
endar Year
QUARTERLY REVENUES ($ mill.)
Mar.31 Jun.30 Sep.30 Dec.31
2019 1869.8 1010.4 931.5 1397.2 5208.9
2020 1605.5 962.7 902.5 1211.0 4681.7
2021 1545.6 986.0 959.4 1408.6 4899.6
2022 1873.3 1183.2 1050 1643.5 5750
2023 1960 1170 1120 1700 5950
Cal- Full
endar Year
EARNINGS PER SHARE A
Mar.31 Jun.30 Sep.30 Dec.31
2019 .82 .05 - - .45 1.31
2020 .76 .13 .09 .34 1.32
2021 .77 .13 .11 .39 1.37
2022 .75 .12 .10 .48 1.45
2023 .80 .20 .20 .40 1.60
Cal- Full
endar Year
QUARTERLY DIVIDENDS PAIDB■
Mar.31 Jun.30 Sep.30 Dec.31
2018 .195 .195 .195 .195 .78
2019 .200 .200 .200 .200 .80
2020 .21 .21 .21 .21 .84
2021 .22 .22 .22 .22 .88
2022 .235 .235
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
27.37 28.96 32.36 24.02 22.99 21.33 16.31 18.04 20.47 14.58 13.90 14.46 13.74 13.63
3.18 3.20 3.32 2.96 3.19 2.98 3.13 3.41 3.60 2.27 2.71 2.07 2.86 3.17
1.14 1.14 1.34 .84 1.06 1.05 1.37 1.57 1.67 .63 1.00 .39 1.30 1.31
.92 .92 .92 .92 .92 .92 .94 .98 1.02 .83 .64 .70 .78 .80
2.33 2.88 3.54 2.81 2.88 3.99 4.83 5.99 6.42 4.26 4.57 5.03 4.88 4.72
18.32 18.52 17.24 17.54 17.63 17.71 17.90 18.77 19.54 12.04 12.60 12.82 13.08 13.36
273.65 274.18 274.26 276.79 279.30 282.18 310.28 313.68 316.04 319.11 323.16 337.02 372.36 382.14
19.2 18.8 12.1 14.3 15.3 19.4 17.9 18.9 22.7 37.3 23.2 NMF 19.3 21.3
1.04 1.00 .73 .95 .97 1.22 1.14 1.06 1.19 1.88 1.22 3.24 1.04 1.13
4.2% 4.3% 5.7% 7.6% 5.7% 4.5% 3.8% 3.3% 2.7% 3.5% 2.8% 2.8% 3.1% 2.9%
5061.2 5657.3 6470.6 4651.8 4492.5 4874.6 5114.5 5208.9
410.6 490.9 530.7 198.6 328.1 128.6 478.3 549.8
34.4% 34.8% 36.9% 41.6% 35.7% 71.0% 19.7% 17.0%
- - - - - - - - - - - - - - - -
55.1% 56.3% 56.9% 60.7% 59.8% 63.5% 55.3% 56.8%
44.9% 43.7% 43.1% 39.3% 40.2% 36.5% 37.9% 36.9%
12373 13480 14331 9792.0 10129 11832 12856 13843
12916 14365 16017 12112 13068 14360 15543 16912
5.0% 5.2% 5.3% 4.0% 5.0% 2.6% 5.1% 5.3%
7.4% 8.3% 8.6% 5.2% 8.1% 3.0% 8.3% 9.2%
7.4% 8.3% 8.6% 5.2% 8.1% 3.0% 9.6% 9.7%
2.5% 3.1% 3.4% NMF 3.0% NMF 4.0% 3.8%
67% 62% 61% NMF 63% NMF 60% 64%
2020 2021 2022 2023 ©VALUE LINE PUB. LLC 25-27
11.95 12.09 14.20 14.60 Revenues per sh 17.55
3.15 3.26 3.45 3.50 ‘‘Cash Flow’’ per sh 4.35
1.32 1.37 1.45 1.60 Earnings per sh A 2.40
.84 .88 .94 .98 Div’d Decl’d per shB■1.08
4.49 4.53 5.90 8.10 Cap’l Spending per sh 5.75
12.66 13.33 13.75 14.35 Book Value per sh C 17.50
391.76 404.30 406.00 408.00 Common Shs Outst’g D 415.00
18.7 18.0 Bold figures are
Value Line
estimates
Avg Ann’l P/E Ratio 19.0
.96 .99 Relative P/E Ratio 1.05
3.4% 3.6%Avg Ann’l Div’d Yield 2.5%
4681.7 4899.6 5750 5950 Revenues ($mill)7300
562.6 626.3 590 655 Net Profit ($mill)990
18.3% 15.7%19.0% 19.0%Income Tax Rate 19.0%
2.9% 2.0%2.0% 2.0%AFUDC % to Net Profit 2.0%
61.2% 56.9%55.0% 57.5%Long-Term Debt Ratio 52.0%
32.9% 33.5%33.5% 35.0%Common Equity Ratio 39.5%
15058 16131 17250 17500 Total Capital ($mill)18750
16620 17882 18750 19250 Net Plant ($mill)22500
5.0% 4.9%3.5% 4.0%Return on Total Cap’l 5.5%
9.6% 9.0%9.5% 9.0%Return on Shr. Equity 11.5%
10.2% 10.6%9.5% 9.0%Return on Com Equity 11.5%
3.7% 4.2%2.5% 3.0%Retained to Com Eq 5.5%
67% 64%65% 60%All Div’ds to Net Prof 55%
Company’s Financial Strength B+
Stock’s Price Stability 100
Price Growth Persistence 20Earnings Predictability 50
(A)Dil. EPS. Excl. gains (losses) on disc. ops.:
’06, (11¢); ’07, 3¢; ’08, ($1.14); ’15, (30¢); ’18,
($1.48). Next egs. report due late October.Qtl’y egs. may not sum to total due to rounding.
(B)Div’ds historically paid in mid-Feb., May,
Aug., Nov.■Div’d reinv. avail.
(C)Incl. intang in ’21: $1485.9 million,$3.68/sh.
(D)In mill.
(E)Spun off Columbia Pipeline Group (7/15)
BUSINESS:NiSource Inc. is a holding company for Northern Indi-
ana Public Service Company (NIPSCO), which supplies electricity
and gas to the northern third of Indiana. Customers: 479,185 elec-
tric in Indiana, 3,200,000 million gas in Indiana, Ohio, Pennsylvania,
Kentucky, Virginia, Maryland, through its Columbia subsidiaries.
Revenue breakdown, 2021: electrical, 31%; gas, 69%; other, less
than 1%. Generating sources, coal, 69.4%; purchased & other,
30.6%. 2021 reported depreciation rates: 2.9% electric, 2.2% gas.
Has 7,304 employees. Chairman: Richard L. Thompson. President
& Chief Executive Officer: Lloyd Yates. Incorporated: Indiana. Ad-
dress: 801 East 86th Avenue, Merrillville, Indiana 46410. Tele-
phone: [phone]. Internet: www.nisource.com.
NiSource beat our earnings and reve-
nue expectations in the second-
quarter.The northern Indiana utility
company posted revenues 20% higher and
share net one cent lower than its 2021
June quarter figures. The observed margin
compression is primarily due to increased
energy costs over the period. The Electric
operations segment underperformed; its
quarterly earnings decreased $11 million
from the year prior as increased operating
costs outpaced revenue growth. The Gas
Distribution segment also experienced
margin pressure, despite overall earnings
growth. Energy costs for the segment in-
creased $124.4 million, doubling the
quarter’s expense year over year. Strong
revenue growth of $167 million insulated
the segment’s bottom line. Yet the reduc-
tion in margin displays the company’s ex-
posure to structural volatility and com-
modity price risk in energy markets.
The stock’s price exhibited volatility
in the quarter, but currently trades
where they were three months ago.
This result is in line with our expectations,
as many of the adverse trends in the oper-
ating environment over the quarter have
since reversed. Specifically, the shares fell
when gas prices peaked in mid-June, but
they have since recovered with the price of
gas reverting to lower levels. Economic
policy and recent data indicate that reduc-
tions in energy prices may persist, provid-
ing relief to the company’s expense profile.
Our 2022 bottom-line forecast remains
unchanged.Management has reaffirmed
guidance of share net between $1.42 and
$1.48 on the year, supporting its long-term
target earnings growth rate of 7% to 9%
year over year. With a significant number
of capital projects in development and
more in the pipeline, this growth rate
seems achievable. Despite current supply
chain challenges disrupting the production
of solar panels, the company is committed
to developing a sustainable electric supply,
which will protect margins from the ener-
gy market’s volatility and promote growth.
With an attractive 3- to 5- year price
upside potential, paired with the
above average dividend yield, this is-
sue is suitable for income investors.
Furthermore, the optional dividend rein-
vestment plan is another plus.
Earl B. Humes August 26, 2022
LEGENDS0.50 x Dividends p sh
divided by Interest Rate. . . .Relative Price StrengthOptions: YesShaded area indicates recession
© 2022 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber’s own, non-commercial, internal use. No partof it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.To subscribe call 1-800-VALUELINE
RECENT
PRICE
P/E
RATIO
RELATIVE
P/E RATIO
DIV’D
YLD( )Trailing:
Median:
VALUE
LINE
80
60
50
40
3025
20
15
10
7.5
2-for-1
Percent
shares
traded
30
20
10
Target Price Range
2025 2026 2027
NEW JERSEY RES.NYSE-NJR 46.83 18.7 22.5
17.0 1.17 3.2%
TIMELINESS 3 Raised 8/19/22
SAFETY 2 Lowered 4/17/20
TECHNICAL 2 Raised 7/22/22
BETA .95 (1.00 = Market)
18-Month Target Price Range
Low-High Midpoint (% to Mid)
$30-$53 $42 (-10%)
2025-27 PROJECTIONSAnn’l TotalPrice Gain Return
High 55 (+15%)7%Low 40 (-15%)Nil
Institutional Decisions
3Q2021 4Q2021 1Q2022
to Buy 109 158 144to Sell 121 95 110Hld’s(000)66131 68260 69401
High: 25.2 25.1 23.8 32.1 34.1 38.9 45.4 51.8 51.2 44.7 44.4 47.5
Low: 19.8 19.3 19.5 21.9 26.8 30.5 33.7 35.6 40.3 21.1 33.3 37.8
% TOT. RETURN 7/22
THIS VL ARITH.*
STOCK INDEX
1 yr. 24.3 -8.2
3 yr. 3.3 40.3
5 yr. 28.5 56.9
CAPITAL STRUCTURE as of 6/30/22
Total Debt $2919.7 mill.Due in 5 Yrs $300 mill.
LT Debt $2524.6 mill.LT Interest $78.6 mill.
Incl. $6.0 mill. capitalized leases.
(LT interest earned: 5.0x; total interest coverage:
5.0x)
Pension Assets-9/21$469.5 mill.
Oblig.$640.2 mill.
Pfd Stock None
Common Stock 96,228,378 shs.
as of 8/1/22
MARKET CAP: $4.5 billion (Mid Cap)
CURRENT POSITION 2020 2021 6/30/22
($MILL.)Cash Assets 117.0 4.7 27.7Other 505.3 629.6 712.4
Current Assets 622.3 634.3 740.1
Accts Payable 270.1 429.6 129.4
Debt Due 152.6 450.1 395.1Other 111.0 171.7 444.9
Current Liab. 533.7 1051.4 969.4
Fix. Chg. Cov. 545% 545% 550%
ANNUAL RATES Past Past Est’d ’19-’21
of change (per sh)10 Yrs. 5 Yrs. to ’25-’27
Revenues -3.0% -6.0%2.5%‘‘Cash Flow’’ 7.0% 4.5%5.0%
Earnings 5.0% 2.5%5.0%Dividends 6.5% 6.5%5.0%
Book Value 7.5% 7.0%4.5%
FiscalYearEnds
FullFiscalYear
QUARTERLY REVENUES ($ mill.)A
Dec.31 Mar.31 Jun.30 Sep.30
2019 811.8 866.2 434.9 479.1 2592.0
2020 615.0 639.6 299.0 400.1 1953.7
2021 454.3 802.2 367.6 532.5 2156.6
2022 675.8 912.3 552.3 559.6 2700
2023 775 1050 500 525 2850
FiscalYearEnds
FullFiscalYear
EARNINGS PER SHARE A B
Dec.31 Mar.31 Jun.30 Sep.30
2019 .61 1.27 d.20 .29 1.96
2020 .44 1.12 d.06 .57 2.07
2021 .46 1.77 d.15 .07 2.16
2022 .69 1.36 d.04 .39 2.40
2023 .70 1.45 .05 .40 2.50
Cal- Full
endar Year
QUARTERLY DIVIDENDS PAID C ■
Mar.31 Jun.30 Sep.30 Dec.31
2018 .273 .273 .273 .2925 1.11
2019 .2925 .2925 .2925 .3125 1.19
2020 .3125 .3125 .3125 .3325 1.27
2021 .3325 .3325 .3325 .3625 1.36
2022 .3625 .3625 .3625
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
39.81 36.31 45.37 31.17 32.05 36.30 27.08 38.38 44.40 32.09 21.90 26.28 33.24 29.01
1.37 1.22 1.81 1.58 1.63 1.70 1.86 1.93 2.73 2.52 2.46 2.68 3.72 2.99
.93 .78 1.35 1.20 1.23 1.29 1.36 1.37 2.08 1.78 1.61 1.73 2.72 1.96
.48 .51 .56 .62 .68 .72 .77 .81 .86 .93 .98 1.04 1.11 1.19
.64 .73 .86 .90 1.05 1.13 1.26 1.33 1.52 3.76 4.15 3.80 4.39 5.83
7.50 7.75 8.64 8.29 8.81 9.36 9.80 10.65 11.48 12.99 13.58 14.33 16.18 17.37
82.88 83.22 84.12 83.17 82.35 82.89 83.05 83.32 84.20 85.19 85.88 86.32 87.69 89.34
16.1 21.6 12.3 14.9 15.0 16.8 16.8 16.0 11.7 16.6 21.3 22.4 15.6 24.3
.87 1.15 .74 .99 .95 1.05 1.07 .90 .62 .84 1.12 1.13 .84 1.29
3.2% 3.0% 3.3% 3.5% 3.7% 3.3% 3.4% 3.7% 3.5% 3.1% 2.9% 2.7% 2.6% 2.5%
2248.9 3198.1 3738.1 2734.0 1880.9 2268.6 2915.1 2592.0
112.4 113.7 176.9 153.7 138.1 149.4 240.5 175.0
7.1% 25.4% 30.2% 26.3% 15.5% 17.2% - - - -
5.0% 3.6% 4.7% 5.6% 7.3% 6.6% 8.2% 6.7%
39.2% 36.6% 38.2% 43.2% 47.7% 44.6% 45.4% 49.8%
60.8% 63.4% 61.8% 56.8% 52.3% 55.4% 54.6% 50.2%
1339.0 1400.3 1564.4 1950.6 2230.1 2233.7 2599.6 3088.9
1484.9 1643.1 1884.1 2128.3 2407.7 2609.7 2651.0 3041.2
9.2% 9.0% 12.1% 8.6% 6.9% 7.7% 10.1% 6.4%
13.8% 12.8% 18.3% 13.9% 11.8% 12.1% 16.9% 11.3%
13.8% 12.8% 18.3% 13.9% 11.8% 12.1% 16.9% 11.3%
6.2% 5.2% 11.0% 7.0% 4.8% 5.0% 10.2% 4.6%
55% 59% 40% 50% 60% 59% 40% 59%
2020 2021 2022 2023 ©VALUE LINE PUB. LLC 25-27
20.39 22.71 28.15 29.40 Revenues per sh A 33.00
3.30 3.36 3.70 3.90 ‘‘Cash Flow’’ per sh 4.25
2.07 2.16 2.40 2.50 Earnings per shB 2.90
1.27 1.36 1.48 1.55 Div’ds Decl’d per shC■1.95
4.65 5.42 6.05 5.15 Cap’l Spending per sh 8.50
19.26 17.18 18.75 20.00 Book Value per shD 25.00
95.80 94.95 98.00 99.00 Common Shs Outst’gE 100.00
17.7 17.5 Bold figures are
Value Line
estimates
Avg Ann’l P/E Ratio 17.0
.91 .94 Relative P/E Ratio .95
3.5% 3.6%Avg Ann’l Div’d Yield 4.0%
1953.7 2156.6 2700 2850 Revenues ($mill)A 3300
196.2 207.7 230 240 Net Profit ($mill)300
NMF 10.3%10.5% 10.5%Income Tax Rate 10.5%
10.0% 9.6%8.5% 8.5%Net Profit Margin 9.0%
55.1% 57.0%59.0% 60.0%Long-Term Debt Ratio 55.0%
44.9% 43.0%41.0% 40.0%Common Equity Ratio 45.0%
4104.2 3793.0 4450 4600 Total Capital ($mill)5500
3983.0 4213.5 4575 4750 Net Plant ($mill)5000
5.6% 6.5%5.0% 5.0%Return on Total Cap’l 5.0%
10.6% 12.7%12.8% 12.8%Return on Shr. Equity 13.5%
10.6% 12.7%12.8% 12.8%Return on Com Equity 13.5%
4.3% 5.6%4.5% 4.5%Retained to Com Eq 4.5%
60% 56%62% 62%All Div’ds to Net Prof 60%
Company’s Financial Strength A+
Stock’s Price Stability 85
Price Growth Persistence 50Earnings Predictability 55
(A)Fiscal year ends Sept. 30th.
(B)Diluted earnings. Qtly. revenues and egs.
may not sum to total due to rounding andchange in shares outstanding. Next earnings
report due early Nov.
(C)Dividends historically paid in early Jan.,
April, July, and October.■Dividend reinvest-ment plan available.
(D)Includes regulatory assets in 2021: $522.1
million, $5.49/share.
(E)In millions, adjusted for splits.
BUSINESS:New Jersey Resources Corp. is a holding company
providing retail/wholesale energy svcs. to customers in NJ, and in
states from the Gulf Coast to New England, and Canada. New Jer-
sey Natural Gas had 564,000 cust. at 9/30/21. Fiscal 2021 volume:
112 bill. cu. ft. (20% interruptible, 61% residential, commercial &
firm transportation, 19% other). N.J. Natural Energy subsidiary pro-
vides unregulated retail/wholesale natural gas and related energy
svcs. 2021 dep. rate: 2.4%. Has 1,251 empls. Off./dir. own less
than 1% of common; BlackRock, 15.3%; Vanguard, 10.6% (12/21
Proxy). CEO, President & Director: Steven D. Westhoven. In-
corporated: New Jersey. Address: 1415 Wyckoff Road, Wall, NJ
07719. Telephone: [phone]. Web: www.njresources.com.
New Jersey Resources exceeded our
fiscal third-quarter revenue estimate
and registered more than a nickel
above share-net expectations.In the
utility company’s low season, it posted
$552 million in revenues, a 50% increase
from the year before, driven chiefly by
higher revenues in it’s utilities business.
Net financial earnings, a non-GAAP finan-
cial performance metric used to adjust for
unrealized gains and losses on derivatives,
economic hedges on inventory, and impair-
ment of equity investments, was negative
$0.04 per share, a dime over our forecasts.
While the energy services division has con-
tinued to experience compressed margins
due to higher gas prices, the segment’s
margins showed improvement from the
December period. Strong performance in
the core utility segment more than made
up for the shortfall, leading to overall good
financial results. In fact, all business units
other than Clean Energy Ventures showed
improved earnings year over year. Overall,
the quarter was positive for shareholders
as the company raised its fiscal 2022 guid-
ance. New estimates suggest net financial
earnings of 2.40 to $2.50 per share.
The company has reinforced its cen-
tral utility segment, New Jersey Natu-
ral Gas, through strategic invest-
ments in other business units.With a
number of capital projects coming to com-
pletion, including the breakthrough Adel-
phia pipeline, the company is able to lever-
age the complimentary suite of its busi-
ness units. In addition to opening doors to
new customers, these investments make
the company more sustainable, with much
of its cutting-edge infrastructure capable
of integrating alternative energy sources
such as clean hydrogen and solar. Climate
and energy provisions within the Inflation
Reduction Act provide a prospective boost
to the company’s clean energy and energy
services segments respectively. To-wit, the
company has a large pipeline of capital
projects moving forward and is actively
seeking to expand its balance sheet.
Overall, the innovative company is
positioning itself well for the future,
but it’s stock appears overpriced.Our
18-month price-appreciation forecast is
negative, as the stock is currently trading
above its estimated fair value.
Earl B.Humes August 26, 2022
LEGENDS0.40 x Dividends p sh
divided by Interest Rate. . . .Relative Price Strength2-for-1 split 3/15Options: YesShaded area indicates recession
© 2022 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber’s own, non-commercial, internal use. No partof it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.To subscribe call 1-800-VALUELINE
RECENT
PRICE
P/E
RATIO
RELATIVE
P/E RATIO
DIV’D
YLD( )Trailing:
Median:
VALUE
LINE
128
9680
64
4840
32
24
16
12
Percent
shares
traded
15
10
5
Target Price Range
2025 2026 2027
N.W. NATURAL NYSE-NWN 53.11 19.3 21.3
24.0 1.23 3.6%
TIMELINESS 3 Raised 8/19/22
SAFETY 3 Lowered 3/19/21
TECHNICAL 1 Raised 8/19/22
BETA .80 (1.00 = Market)
18-Month Target Price Range
Low-High Midpoint (% to Mid)
$37-$63 $50 (-5%)
2025-27 PROJECTIONSAnn’l TotalPrice Gain Return
High 85 (+60%)15%Low 55 (+5%)5%
Institutional Decisions
3Q2021 4Q2021 1Q2022
to Buy 95 104 161to Sell 95 93 74Hld’s(000)21597 21695 24444
High: 49.0 50.8 46.6 52.6 52.3 66.2 69.5 71.8 74.1 77.3 56.8 57.6
Low: 39.6 41.0 40.0 40.1 42.0 48.9 56.5 51.5 57.2 42.3 41.7 45.8
% TOT. RETURN 7/22
THIS VL ARITH.*
STOCK INDEX
1 yr. 6.8 -8.2
3 yr. -16.8 40.3
5 yr. -0.1 56.9
CAPITAL STRUCTURE as of 6/30/22
Total Debt $1268.6 mill.Due in 5 Yrs $175.3 mill.
LT Debt $1045.5 mill.LT Interest $44.5 mill.
(Total interest coverage: 3.1x)
Pension Assets-12/21 $399.2 mill.
Oblig.$569.8 mill.
Pfd Stock None
Common Stock 34,817,043 shares
as of 07/28/22
MARKET CAP $1.8 billion (Mid Cap)
CURRENT POSITION 2020 2021 6/30/22($MILL.)Cash Assets 30.2 18.6 17.2
Other 293.0 418.7 340.8
Current Assets 323.2 437.3 358.0
Accts Payable 97.9 133.5 135.4
Debt Due 399.9 389.8 223.0Other 129.3 201.5 180.9
Current Liab. 627.1 724.8 539.3
Fix. Chg. Cov. 335% 335% 312%
ANNUAL RATES Past Past Est’d ’19-’21
of change (per sh)10 Yrs. 5 Yrs. to ’25-’27
Revenues -2.5% - -4.5%‘‘Cash Flow’’ 1.0% 2.5%5.0%
Earnings -1.0% 2.5%6.5%Dividends 1.5% .5%.5%
Book Value 1.0% .5%4.0%
Cal- Full
endar Year
QUARTERLY REVENUES ($ mill.)
Mar.31 Jun.30 Sep.30 Dec.31
2019 285.4 123.4 90.3 247.3 746.4
2020 285.2 135.0 93.3 260.2 773.7
2021 315.9 148.9 101.5 294.1 860.4
2022 350.3 195.0 110 309.7 965
2023 365 160 115 340 980
Cal- Full
endar Year
EARNINGS PER SHARE A
Mar.31 Jun.30 Sep.30 Dec.31
2019 1.50 .07 d.61 1.26 2.19
2020 1.58 d.17 d.61 1.50 2.30
2021 1.94 d.02 d.67 1.31 2.56
2022 1.80 .05 d.60 1.35 2.60
2023 1.95 .05 d.55 1.40 2.85
Cal- Full
endar Year
QUARTERLY DIVIDENDS PAIDB■
Mar.31 Jun.30 Sep.30 Dec.31
2018 .4725 .4725 .4725 .475 1.89
2019 .475 .475 .475 .4775 1.90
2020 .4775 .4775 .4775 .48 1.91
2021 .48 .48 .48 .483 1.92
2022 .483 .483 .483
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
37.20 39.13 39.16 38.17 30.56 31.72 27.14 28.02 27.64 26.39 23.61 26.52 24.45 24.49
4.76 5.41 5.31 5.20 5.18 5.00 4.94 5.04 5.05 4.91 4.93 1.04 5.28 5.15
2.35 2.76 2.57 2.83 2.73 2.39 2.22 2.24 2.16 1.96 2.12 d1.94 2.33 2.19
1.39 1.44 1.52 1.60 1.68 1.75 1.79 1.83 1.85 1.86 1.87 1.88 1.89 1.90
3.56 4.48 3.92 5.09 9.35 3.76 4.91 5.13 4.40 4.37 4.87 7.43 7.43 7.95
22.01 22.52 23.71 24.88 26.08 26.70 27.23 27.77 28.12 28.47 29.71 25.85 26.41 28.42
27.24 26.41 26.50 26.53 26.58 26.76 26.92 27.08 27.28 27.43 28.63 28.74 28.88 30.47
15.9 16.7 18.1 15.2 17.0 19.0 21.1 19.4 20.7 23.7 26.9 - - 26.6 30.9
.86 .89 1.09 1.01 1.08 1.19 1.34 1.09 1.09 1.19 1.41 - - 1.44 1.65
3.7% 3.1% 3.3% 3.7% 3.6% 3.9% 3.8% 4.2% 4.1% 4.0% 3.3% 3.0% 3.0% 2.8%
730.6 758.5 754.0 723.8 676.0 762.2 706.1 746.4
59.9 60.5 58.7 53.7 58.9 d55.6 67.3 65.3
42.4% 40.8% 41.5% 40.0% 40.9% - - 26.4% 16.2%
8.2% 8.0% 7.8% 7.4% 8.7% NMF 9.5% 8.8%
48.5% 47.6% 44.8% 42.5% 44.4% 47.9% 48.1% 48.2%
51.5% 52.4% 55.2% 57.5% 55.6% 52.1% 51.9% 51.8%
1424.7 1433.6 1389.0 1357.7 1529.8 1426.0 1468.9 1672.0
1973.6 2062.9 2121.6 2182.7 2260.9 2255.0 2421.4 2438.9
5.7% 5.8% 5.8% 5.5% 5.1% NMF 5.8% 5.2%
8.2% 8.1% 7.6% 6.9% 6.9% NMF 8.8% 7.5%
8.2% 8.1% 7.6% 6.9% 6.9% NMF 8.8% 7.5%
1.6% 1.5% 1.1% .6% .9% NMF 2.1% 1.4%
80% 81% 85% 92% 87% NMF 76% 82%
2020 2021 2022 2023 ©VALUE LINE PUB. LLC 25-27
25.29 27.64 27.55 27.60 Revenues per sh 33.55
5.69 6.17 6.75 6.40 ‘‘Cash Flow’’ per sh 7.65
2.30 2.56 2.60 2.85 Earnings per shA 3.45
1.91 1.92 1.93 1.94 Div’ds Decl’d per shB■1.96
9.18 9.49 9.60 7.75 Cap’l Spending per sh 9.40
29.05 30.04 32.55 34.25 Book Value per shD 37.20
30.59 31.13 35.00 35.50 Common Shs Outst’gC 32.00
25.0 19.5 Bold figures are
Value Line
estimates
Avg Ann’l P/E Ratio 20.0
1.28 1.06 Relative P/E Ratio 1.10
3.3% 3.8%Avg Ann’l Div’d Yield 2.6%
773.7 860.4 965 980 Revenues ($mill)1125
70.3 78.7 90.0 100.0 Net Profit ($mill)135
23.1% 25.8%21.0% 21.0%Income Tax Rate 21.0%
9.1% 9.1%9.3% 9.7%Net Profit Margin 12.0%
49.2% 52.8%50.0% 50.0%Long-Term Debt Ratio 48.0%
50.8% 47.2%50.0% 50.0%Common Equity Ratio 52.0%
1748.8 1979.7 2200 2255 Total Capital ($mill)2550
2654.8 2871.4 3150 3360 Net Plant ($mill)4250
5.2% 5.1%4.0% 4.5%Return on Total Cap’l 6.0%
7.9% 8.4%8.0% 9.5%Return on Shr. Equity 9.5%
7.9% 8.4%8.0% 9.5%Return on Com Equity 9.5%
1.7% 2.4%2.0% 3.0%Retained to Com Eq 4.0%
79% 71%75% 68%All Div’ds to Net Prof 55%
Company’s Financial Strength A
Stock’s Price Stability 85
Price Growth Persistence 35Earnings Predictability 10
(A)Diluted earnings per share. Excludes non-
recurring items: ’06, ($0.06); ’08, ($0.03); ’09,
$0.06; May not sum due to rounding. Nextearnings report due in early November.
(B)Dividends historically paid in mid-February,
May, August, and November.
■Dividend reinvestment plan available.(C)In millions.
(D)Includes intangibles. In 2021: $70.6 million,
$2.27/share.
BUSINESS:Northwest Natural Holding Co. distributes natural gas
to 1,000 communities, 775,000 customers, in Oregon (89% of cus-
tomers) and in southwest Washington state. Principal cities served:
Portland and Eugene, OR; Vancouver, WA. Service area popula-
tion: 3.7 mill. (77% in OR). Company buys gas supply from Canadi-
an and U.S. producers; has transportation rights on Northwest
Pipeline system. Owns local underground storage. Rev. break-
down: residential, 37%; commercial, 22%; industrial, gas trans-
portation, 41%. Employs 1,167. BlackRock Inc. owns 17.2% of
shares; Vanguard, 11.8%; Off./Dir., .92% (4/22 proxy). CEO: David
H. Anderson. Inc.: Oregon. Address: 220 NW 2nd Ave., Portland,
OR 97209. Tel.: [phone]. Internet: www.nwnatural.com.
Shares of Northwest Natural Holdings
traded modestly higher over the
quarter, registering an advance of
2.3% since our last report in May.
These gains are less than the S&P 500’s
4.4% rise over the same period. However,
considering the stock’s bright first-quarter
returns, year to date performance has out-
paced the index by more than 18%.
The company exceeded second-
quarter earnings and revenue es-
timates.Revenues of $195 million
represented a 32% increase from a year
earlier. Earnings per share increased to
$0.05 in the quarter, up from a loss of
$0.02 in 2021. In the six months ended
June 30, revenues were $80.5 million high-
er, while share-net was down $0.07. High-
er energy costs in the first half of the year
impaired the company’s profitability. With
these prices falling in July and August,
the company’s third and fourth-quarter
profit margins and earnings are likely to
show year over year improvement.
A petition for higher base rates is ex-
pected to pass, effective November 1,
subject to regulatory approval.The
rate settlement stipulates an annual reve-
nue requirement increase of $62.7 million
per year and an overall higher base rate of
$1.77 billion, allowing for $337 million of
additional provisions for net plant. These
investments will serve to allow continued
customer growth as the company expands
geographically. In the past year it has add-
ed more than ten-thousand new custom-
ers. The settlement will also boost its ef-
forts towards its ambitious destination
zero program to reduce scope 2 greenhouse
gas emissions. One of Northwest’s flagship
cap-ex projects resulting from the higher
rates is a one megawatt hydrogen gas
plant that will be blended into the gas
supply. In the fourth-quarter we expect
revenue and earnings to see a material ad-
vancement as these new rates take effect.
The stock’s strong dividend yield does
not make up for modest appreciation
potential.Ranked 4 for Timeliness, this
innovative utility stock does not offer out-
sized returns from it’s current price level.
The 18 month midpoint is showing a loss
of 5%. Even with a 3.6% dividend yield,
this stock does not offer an attractive
valuation compared to its industry peers.
Earl B. Humes August 26, 2022
LEGENDS0.60 x Dividends p sh
divided by Interest Rate. . . .Relative Price StrengthOptions: YesShaded area indicates recession
© 2022 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber’s own, non-commercial, internal use. No partof it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.To subscribe call 1-800-VALUELINE
RECENT
PRICE
P/E
RATIO
RELATIVE
P/E RATIO
DIV’D
YLD( )Trailing:
Median:
VALUE
LINE
200
160
100
80
6050
40
30
20
Percent
shares
traded
21
14
7
Target Price Range
2025 2026 2027
ONE GAS, INC.NYSE-OGS 83.14 20.5 21.2
NMF 1.24 3.1%
TIMELINESS 3 Raised 5/13/22
SAFETY 2 New 6/2/17
TECHNICAL 2 Lowered 8/26/22
BETA .80 (1.00 = Market)
18-Month Target Price Range
Low-High Midpoint (% to Mid)
$69-$115 $92 (10%)
2025-27 PROJECTIONSAnn’l TotalPrice Gain Return
High 145 (+75%)17%Low 105 (+25%)9%
Institutional Decisions
3Q2021 4Q2021 1Q2022
to Buy 135 148 146
to Sell 122 119 118
Hld’s(000)42681 43769 44094
High: 44.3 51.8 67.4 79.5 87.8 96.7 97.0 81.9 92.3Low: 31.9 38.9 48.0 61.4 62.2 75.8 63.7 62.5 73.4
% TOT. RETURN 7/22
THIS VL ARITH.*
STOCK INDEX
1 yr. 18.8 -8.2
3 yr. 0.9 40.3
5 yr. 32.6 56.9
The shares of ONE Gas, Inc. began trad-
ing ‘‘regular-way’’ on the New York Stock
Exchange on February 3, 2014. That hap-
pened as a result of the separation of
ONEOK’s natural gas distribution operation.
Regarding the details of the spinoff, on Jan-
uary 31, 2014, ONEOK distributed one
share of OGS common stock for every four
shares of ONEOK common stock held by
ONEOK shareholders of record as of the
close of business on January 21. It should
be mentioned that ONEOK did not retain
any ownership interest in the new company.
CAPITAL STRUCTURE as of 6/30/22
Total Debt $4174.0 mill.Due in 5 Yrs $2900.0 mill.
LT Debt $2283.9 mill.LT Interest$140.0 mill.
(LT interest earned: 5.1x; total interest
coverage: 5.1x)
Leases, Uncapitalized Annual rentals $7.5 mill.
Pfd StockNone
Pension Assets-12/21$1245.2 mill.
Oblig.$1272.8 mill.
Common Stock 54,137,522 shs.
as of 7/25/22
MARKET CAP: $4.5 billion (Mid Cap)
CURRENT POSITION 2020 2021 6/30/22($MILL.)Cash Assets 8.0 8.9 7.4
Other 531.9 2215.7 2141.5
Current Assets 539.9 2224.6 2148.9
Accts Payable 152.3 258.6 186.4
Debt Due 418.2 494.0 1890.1Other 226.6 227.9 251.8
Current Liab. 797.1 980.5 2328.3
Fix. Chg. Cov. 587% 625% 635%
ANNUAL RATES Past Past Est’d ’19-’21
of change (per sh)10 Yrs. 5 Yrs. to ’25-’27
Revenues - - .5%12.0%‘‘Cash Flow’’ - - 8.5%6.5%
Earnings - - 9.5%6.5%Dividends - - 13.5%6.5%
Book Value - - 3.5%8.0%
Cal- Full
endar Year
QUARTERLY REVENUES ($ mill.)
Mar.31 Jun.30 Sep.30 Dec.31
2019 661.0 290.6 248.6 452.5 1652.7
2020 528.2 273.3 244.6 484.2 1530.3
2021 625.3 315.6 273.9 593.8 1808.6
2022 971.5 428.9 343.5 616.1 2360
2023 1019 470 366 645 2500
Cal- Full
endar Year
EARNINGS PER SHAREA
Mar.31 Jun.30 Sep.30 Dec.31
2019 1.76 .46 .33 .96 3.51
2020 1.72 .48 .39 1.09 3.68
2021 1.79 .56 .38 1.12 3.85
2022 1.83 .59 .43 1.15 4.00
2023 1.88 .65 .49 1.18 4.20
Cal- Full
endar Year
QUARTERLY DIVIDENDS PAIDB■
Mar.31 Jun.30 Sep.30 Dec.31
2018 .46 .46 .46 .46 1.84
2019 .50 .50 .50 .50 2.00
2020 .54 .54 .54 .54 2.16
2021 .58 .58 .58 .58 2.32
2022 .62 .62 .62
2012 2013 2014 2015 2016 2017 2018 2019
- - - - 34.92 29.62 27.30 29.43 31.08 31.32
- - - - 4.52 4.82 5.43 5.96 6.32 6.96
- - - - 2.07 2.24 2.65 3.02 3.25 3.51
- - - - .84 1.20 1.40 1.68 1.84 2.00
- - - - 5.70 5.63 5.91 6.81 7.50 7.91
- - - - 34.45 35.24 36.12 37.47 38.86 40.35
- - - - 52.08 52.26 52.28 52.31 52.57 52.77
- - - - 17.8 19.8 22.7 23.5 23.1 25.3
- - - - .94 1.00 1.19 1.18 1.25 1.35
- - - - 2.3% 2.7% 2.3% 2.4% 2.5% 2.3%
- - - - 1818.9 1547.7 1427.2 1539.6 1633.7 1652.7
- - - - 109.8 119.0 140.1 159.9 172.2 186.7
- - - - 38.4% 38.0% 37.8% 36.4% 23.7% 18.7%
- - - - 6.0% 7.7% 9.8% 10.4% 10.5% 11.3%
- - - - 40.1% 39.5% 38.7% 37.8% 38.6% 37.7%
- - - - 59.9% 60.5% 61.3% 62.2% 61.4% 62.3%
- - - - 2995.3 3042.9 3080.7 3153.5 3328.1 3415.5
- - - - 3293.7 3511.9 3731.6 4007.6 4283.7 4565.2
- - - - 4.4% 4.7% 5.2% 5.8% 5.9% 6.4%
- - - - 6.1% 6.5% 7.4% 8.2% 8.4% 8.8%
- - - - 6.1% 6.5% 7.4% 8.2% 8.4% 8.8%
- - - - 3.7% 3.1% 3.5% 3.7% 3.7% 3.8%
- - - - 40% 53% 52% 55% 56% 56%
2020 2021 2022 2023 ©VALUE LINE PUB. LLC 25-27
28.78 33.72 43.30 45.85 Revenues per sh 61.40
7.36 7.71 8.05 8.50 ‘‘Cash Flow’’ per sh 10.55
3.68 3.85 4.00 4.20 Earnings per sh A 5.30
2.16 2.32 2.48 2.64 Div’ds Decl’d per sh B■3.12
8.87 9.23 9.35 9.55 Cap’l Spending per sh 9.85
42.01 43.81 49.60 50.70 Book Value per sh 63.15
53.17 53.63 54.50 54.50 Common Shs Outst’g C 57.00
21.7 18.9 Bold figures are
Value Line
estimates
Avg Ann’l P/E Ratio 23.5
1.11 1.03 Relative P/E Ratio 1.30
2.7% 3.2%Avg Ann’l Div’d Yield 2.5%
1530.3 1808.6 2360 2500 Revenues ($mill)3500
196.4 206.4 218 230 Net Profit ($mill)300
17.5% 16.3%18.0% 18.5%Income Tax Rate 22.0%
12.8% 11.4%9.2% 9.2%Net Profit Margin 8.6%
41.5% 61.0%48.0% 49.0%Long-Term Debt Ratio 52.0%
58.5% 39.0%52.0% 51.0%Common Equity Ratio 48.0%
3815.7 6032.9 5200 5420 Total Capital ($mill)7500
4867.1 5190.8 5500 5800 Net Plant ($mill)6750
6.0% 3.9%5.5% 5.5%Return on Total Cap’l 5.5%
8.8% 8.8%8.0% 8.5%Return on Shr. Equity 8.5%
8.8% 8.8%8.0% 8.5%Return on Com Equity 8.5%
3.7% 3.5%3.0% 3.0%Retained to Com Eq 3.5%
58% 60%62% 63%All Div’ds to Net Prof 59%
Company’s Financial Strength B++
Stock’s Price Stability 95
Price Growth Persistence 60
Earnings Predictability 100
(A)Diluted EPS. Excludes nonrecurring gain:
2017, $0.06. Next earnings report due early
Nov.
(B)Dividends historically paid in early March,
June, Sept., and Dec.■Dividend reinvestment
plan. Direct stock purchase plan.
(C)In millions.
BUSINESS:ONE Gas, Inc. provides natural gas distribution serv-
ices to more than two million customers. There are three divisions:
Oklahoma Natural Gas, Kansas Gas Service, and Texas Gas Serv-
ice. The company purchased 164 Bcf of natural gas supply in 2021,
compared to 153 Bcf in 2020. Total volumes delivered by customer
(fiscal 2021): transportation, 59.3%; residential, 30.4%; commercial
& industrial, 9.7%; other, .6%. ONE Gas has around 3,600 employ-
ees. BlackRock owns 12.2% of common stock; The Vanguard
Group, 10.9%; American Century Investment, 8.0%; officers and
directors, 1.5% (4/22 Proxy). CEO: Robert S. McAnnally. In-
corporated: Oklahoma. Address: 15 East Fifth Street, Tulsa, Okla-
homa 74103. Tel.: [phone]. Internet: www.onegas.com.
Earnings for ONE Gas are running a
bit ahead of last year’s.Indeed, through
the first half, share net of $2.42 was 3%
higher than the 2021 total of $2.35. This
can be attributed partly to benefits from
new rates. Moreover, there was an in-
crease in residential sales due primarily to
net customer growth in Texas and Oklaho-
ma. Bad-debt expense dropped, as well.
So, if there are no major downside sur-
prises during the second half, full-year
profits stand to advance around 4%, to
$4.00 a share, relative to the 2021 figure
of $3.85. Concerning next year, the compa-
ny’s share net may grow at a similar per-
centage rate, to $4.20, assuming that oper-
ating margins widen further.
Corporate finances are in solid shape.
When the second quarter concluded, cash
and equivalents were about $7.4 million,
and cash flows were decent. Furthermore,
there was $490.1 million available (out of
$1 billion) under a commercial paper pro-
gram. ONE Gas also possesses a $1 billion
revolving credit facility expiring in March,
2027. Finally, at the end of the June peri-
od, long-term debt was a reasonable 48%
of total capital, and short-term borrowings
did not seem to be a major stumbling
block. All things considered, the energy
firm ought to continue to be able to meet
its working capital requirements, capital
expenditures, and other obligations with
minimal difficulty.
Business prospects over the 2025-2027
horizon look promising.ONE Gas
remains the top natural gas distributor (as
measured by customer count) in both Ok-
lahoma and Kansas, and holds the
number-three position in Texas. Also, we
believe these markets have decent growth
possibilities and are located in one of the
most active drilling regions in the United
States. Another positive is the healthy bal-
ance sheet.
The good-quality stock holds
worthwhile long-term total return
potential.Upside possibilities during the
3- to 5-year span are decent. What’s more,
the dividend yield is respectable, relative
to the average yield in Value Line’s Natu-
ral Gas Utility universe. Meanwhile, these
shares are ranked to perform in line with
the broader market for the coming six to
12 months.
Frederick L. Harris, III August 26, 2022
LEGENDS39.00 x Dividends p sh. . . .Relative Price StrengthOptions: YesShaded area indicates recession
© 2022 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber’s own, non-commercial, internal use. No partof it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.To subscribe call 1-800-VALUELINE
RECENT
PRICE
P/E
RATIO
RELATIVE
P/E RATIO
DIV’D
YLD( )Trailing:
Median:
VALUE
LINE
160
120
100
80
6050
40
30
20
15
Percent
shares
traded
18
12
6
Target Price Range
2025 2026 2027
SPIRE INC.NYSE-SR 76.28 17.6 19.5
19.0 1.06 3.7%
TIMELINESS 3 Raised 6/17/22
SAFETY 2 Raised 6/20/03
TECHNICAL 2 Lowered 8/26/22
BETA .80 (1.00 = Market)
18-Month Target Price Range
Low-High Midpoint (% to Mid)
$54-$89 $72 (-5%)
2025-27 PROJECTIONSAnn’l TotalPrice Gain Return
High 130 (+70%)17%Low 95 (+25%)9%
Institutional Decisions
3Q2021 4Q2021 1Q2022
to Buy 125 132 144to Sell 113 116 113Hld’s(000)42729 44013 44838
High: 42.8 44.0 48.5 55.2 61.0 71.2 82.9 81.1 88.0 88.0 77.9 79.2
Low: 32.9 36.5 37.4 44.0 49.1 57.1 62.3 60.1 71.7 50.6 59.3 61.9
% TOT. RETURN 7/22
THIS VL ARITH.*
STOCK INDEX
1 yr. 10.3 -8.2
3 yr. 1.9 40.3
5 yr. 22.8 56.9
CAPITAL STRUCTURE as of 6/30/22
Total Debt $3948.3 mill.Due in 5 Yrs$1520.0 mill.
LT Debt $3207.9 mill.LT Interest $145.0 mill.
(Total interest coverage: 4.2x)
Leases, UncapitalizedAnnual rentals $8.8 mill.
Pension Assets-9/21$945.7 mill.
Oblig.$1318.0 mill.
Pfd Stock $242.0 mill.Pfd Div’d $14.8 mill.
Common Stock 52,492,777 shs.
as of 7/31/22
MARKET CAP: $4.0 billion (Mid Cap)
CURRENT POSITION 2020 2021 6/30/22($MILL.)Cash Assets 4.1 4.3 16.0
Other 586.5 1312.2 1245.1
Current Assets 590.6 1316.5 1261.1
Accts Payable 243.3 409.9 581.2Debt Due 708.4 727.8 740.4
Other 497.5 470.6 428.3
Current Liab. 1449.2 1608.3 1749.9
Fix. Chg. Cov. 373% 448% 440%
ANNUAL RATES Past Past Est’d ’19-’21
of change (per sh)10 Yrs. 5 Yrs. to ’25-’27
Revenues -6.5% - -8.5%
‘‘Cash Flow’’ 5.0% 6.0%7.5%Earnings 2.0% 2.5%9.0%
Dividends 4.5% 6.0%5.0%Book Value 6.5% 4.5%7.0%
FiscalYearEnds
FullFiscalYear
QUARTERLY REVENUES ($ mill.)A
Dec.31 Mar.31 Jun.30 Sep.30
2019 602.0 803.5 321.3 225.6 1952.4
2020 566.9 715.5 321.1 251.9 1855.4
2021 512.6 1104.9 327.8 290.2 2235.5
2022 555.4 880.9 448.0 260.7 2145
2023 580 950 405 265 2200
FiscalYearEnds
FullFiscalYear
EARNINGS PER SHARE A B F
Dec.31 Mar.31 Jun.30 Sep.30
2019 1.32 3.04 d.09 d.74 3.52
2020 1.24 2.54 d1.87 d.45 1.44
2021 1.65 3.55 .03 d.26 4.96
2022 1.01 3.27 d.10 d.28 3.90
2023 1.35 3.36 d.03 d.33 4.35
Cal- Full
endar Year
QUARTERLY DIVIDENDS PAID C ■
Mar.31 Jun.30 Sep.30 Dec.31
2018 .5625 .5625 .5625 .5625 2.25
2019 .5925 .5925 .5925 .5925 2.37
2020 .6225 .6225 .6225 .6225 2.49
2021 .65 .65 .65 .65 2.60
2022 .685 .685 .685
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
93.51 93.40 100.44 85.49 77.83 71.48 49.90 31.10 37.68 45.59 33.68 36.07 38.78 38.30
3.81 3.87 4.22 4.56 4.11 4.62 4.58 3.12 3.87 6.15 6.16 6.54 7.55 7.12
2.37 2.31 2.64 2.92 2.43 2.86 2.79 2.02 2.35 3.16 3.24 3.43 4.33 3.52
1.40 1.45 1.49 1.53 1.57 1.61 1.66 1.70 1.76 1.84 1.96 2.10 2.25 2.37
2.97 2.72 2.57 2.36 2.56 3.02 4.83 4.00 3.96 6.68 6.42 9.08 9.86 16.15
18.85 19.79 22.12 23.32 24.02 25.56 26.67 32.00 34.93 36.30 38.73 41.26 44.51 45.14
21.36 21.65 21.99 22.17 22.29 22.43 22.55 32.70 43.18 43.36 45.65 48.26 50.67 50.97
13.6 14.2 14.3 13.4 13.7 13.0 14.5 21.3 19.8 16.5 19.6 19.8 16.7 22.8
.73 .75 .86 .89 .87 .82 .92 1.20 1.04 .83 1.03 1.00 .90 1.21
4.3% 4.4% 3.9% 3.9% 4.7% 4.3% 4.1% 4.0% 3.8% 3.5% 3.1% 3.1% 3.1% 3.0%
1125.5 1017.0 1627.2 1976.4 1537.3 1740.7 1965.0 1952.4
62.6 52.8 84.6 136.9 144.2 161.6 214.2 184.6
29.6% 25.0% 27.6% 31.2% 32.5% 32.4% NMF 15.7%
5.6% 5.2% 5.2% 6.9% 9.4% 9.3% 10.9% 9.5%
36.1% 46.6% 55.1% 53.0% 50.9% 50.0% 45.7% 45.0%
63.9% 53.4% 44.9% 47.0% 49.1% 50.0% 54.3% 49.7%
941.0 1959.0 3359.4 3345.1 3601.9 3986.3 4155.5 4625.6
1019.3 1776.6 2759.7 2941.2 3300.9 3665.2 3970.5 4352.0
7.9% 3.3% 3.1% 5.1% 4.9% 5.0% 6.3% 5.1%
10.4% 5.0% 5.6% 8.7% 8.2% 8.1% 9.5% 7.3%
10.4% 5.0% 5.6% 8.7% 8.2% 8.1% 9.5% 7.9%
4.3% 1.0% 1.5% 3.7% 3.3% 3.3% 4.7% 2.7%
59% 81% 73% 58% 59% 60% 51% 66%
2020 2021 2022 2023 ©VALUE LINE PUB. LLC 25-27
35.96 43.24 40.85 41.90 Revenues per sh A 63.65
5.25 9.09 8.40 9.10 ‘‘Cash Flow’’ per sh 10.90
1.44 4.96 3.90 4.35 Earnings per sh A B 5.50
2.49 2.60 2.74 2.86 Div’ds Decl’d per sh C■3.30
12.37 12.09 10.30 11.25 Cap’l Spending per sh 12.00
44.19 46.74 50.80 56.15 Book Value per sh D 67.10
51.60 51.70 52.50 52.50 Common Shs Outst’g E 55.00
NMF 13.6 Bold figures are
Value Line
estimates
Avg Ann’l P/E Ratio 20.5
NMF .73 Relative P/E Ratio 1.15
3.4% 3.8%Avg Ann’l Div’d Yield 3.0%
1855.4 2235.5 2145 2200 Revenues ($mill)A 3500
88.6 271.7 205 230 Net Profit ($mill)300
12.3% 20.1%20.0% 20.5%Income Tax Rate 25.0%
4.8% 12.2%9.6% 10.5%Net Profit Margin 8.6%
49.0% 52.5%53.0% 52.0%Long-Term Debt Ratio 51.0%
46.1% 43.2%43.0% 44.0%Common Equity Ratio 45.0%
4946.0 5597.3 6200 6700 Total Capital ($mill)8200
4680.1 5055.7 5400 5715 Net Plant ($mill)7100
2.9% 5.8%5.0% 5.0%Return on Total Cap’l 5.0%
3.5% 10.2%7.5% 8.0%Return on Shr. Equity 8.0%
3.2% 10.6%7.5% 8.0%Return on Com Equity 8.0%
NMF 5.1%1.5% 2.0%Retained to Com Eq 3.0%
NMF 54%77% 72%All Div’ds to Net Prof 65%
Company’s Financial Strength B++
Stock’s Price Stability 90
Price Growth Persistence 55Earnings Predictability 40
(A)Fiscal year ends Sept. 30th.(B)Based on
diluted shares outstanding. Excludes nonrecur-
ring loss: ’06, 7¢. Excludes gain from discontin-ued operations: ’08, 94¢. Next earnings report
due late Oct.(C)Dividends paid in early Janu-
ary, April, July, and October.■Dividend rein-
vestment plan available.(D)Incl. deferredcharges. In ’21: $1,171.6 mill., $22.66/sh.
(E)In millions.(F)Qtly. egs. may not sum due
to rounding or change in shares outstanding.
BUSINESS:Spire Inc., formerly known as the Laclede Group, Inc.,
is a holding company for natural gas utilities, which distributes natu-
ral gas across Missouri, including the cities of St. Louis and Kansas
City, Alabama, and Mississippi. Has roughly 1.7 million customers.
Acquired Missouri Gas 9/13, Alabama Gas Co 9/14. Utility therms
sold and transported in fiscal 2021: 3.3 bill. Revenue mix for regu-
lated operations: residential, 58%; commercial and industrial, 28%;
transportation, 6%; other, 8%. Has about 3,710 employees. Officers
and directors own 3.0% of common shares; BlackRock, 11.5%
(1/22 proxy). Chairman: Edward Glotzbach; CEO: Suzanne Sither-
wood. Inc.: Missouri. Address: 700 Market Street, St. Louis, Mis-
souri 63101. Tel.: [phone]. Internet: www.spireenergy.com.
Spire Inc. appears to be en route to a
down year.Indeed, through the first nine
months of fiscal 2022 (which concluded on
June 30th), share net of $4.18 was 20% be-
low the previous-year figure of $5.23. That
was attributable partly to reduced earn-
ings from the Gas Marketing division, as
fiscal 2021’s results enjoyed very favorable
market conditions, particularly in the sec-
ond quarter, created by extreme weather
associated with Winter Storm Uri. Fur-
thermore, the Gas Utility unit was con-
strained, to a certain degree by heightened
expenses. So, full-year share net stands to
plummet over 20%, to $3.90, relative to fis-
cal 2021’s $4.96 tally.
Earnings prospects in fiscal 2023 are
hazy, at the moment.That’s attrib-
utable, in part, to a pending rate case in
Missouri. Too, the company is authorized
by the Federal Energy Regulatory Com-
mission to operate the key Spire STL
Pipeline, temporarily, while it reviews
whether permanent approval should be
granted. (Management expects the process
to continue into calendar 2023.) In any
event, our tentative share-net estimate
sits at $4.35, which indicates a partial
rebound, assuming that the business
climate is generally favorable.
This year’s capital expenditures are
now anticipated to be around $540
million.(That is almost 14% lower than
the fiscal 2021 figure of $624.8 million.)
Investments are being deployed to such
segments as infrastructure upgrades at
the utilities and new business develop-
ment initiatives. Management adds that it
expects total spending from fiscal 2022
through fiscal 2026 to be in the neighbor-
hood of $3 billion. If corporate finances
remain in solid condition, Spire ought to
have minimal difficulty accomplishing
these goals.
The good-quality stock’s primary at-
traction is the dividend yield.In fact,
this figure compares nicely to that of the
average Natural Gas Utility equity
tracked by Value Line. What’s more,
steady increases in the payout seem to be
in store out to 2025-2027. Meanwhile,
Spire shares are pegged to perform just in
line with the broader market during the
coming six to 12 months (Timeliness rank
3: Average).
Frederick L. Harris, III August 26, 2022
LEGENDS26.50 x Dividends p sh. . . .Relative Price StrengthOptions: YesShaded area indicates recession
© 2022 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind.THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber’s own, non-commercial, internal use. No partof it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product.To subscribe call 1-800-VALUELINE
RECENT
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VALUE
LINE