- Wondering if ONE Gas at around US$85.79 is priced for opportunity or already fully valued? This article walks through the key signals that matter for you.
- The stock has delivered a 10.8% return year to date and 20.4% over the last year, which sits against a modest 0.5% move over the past month and a 0.4% decline over the last week.
- Recent coverage has focused on ONE Gas as a regulated gas utility, highlighting its role in providing essential services and the way investors often look to such companies for stability. That context helps explain why the share price can react to shifts in investor appetite for income and perceived risk in utilities, even when company specific headlines are quieter.
- Despite those returns, ONE Gas currently has a valuation score of 0 out of 6. The next sections will compare traditional valuation tools like P/E and discounted cash flow with an approach that can give you an even clearer read on whether the current price makes sense.
ONE Gas scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: ONE Gas Dividend Discount Model (DDM) Analysis
The Dividend Discount Model estimates what ONE Gas shares might be worth by projecting future dividends and discounting them back to today. It relies on the idea that your return comes from the stream of dividends you receive over time.
For ONE Gas, the model uses a current annual dividend per share of about US$2.80 and a payout ratio of roughly 62.32%. With a return on equity of 8.32%, the implied dividend growth rate is 3.13%, calculated from retaining around 37.68% of earnings and reinvesting them. That growth assumption feeds into the DDM to arrive at an estimated intrinsic value of US$72.74 per share.
Compared with the current share price of around US$85.79, the DDM outcome indicates the stock is about 17.9% overvalued. In other words, the present price already reflects a strong outlook for future dividends and more on top of that.
Result: OVERVALUED
Our Dividend Discount Model (DDM) analysis suggests ONE Gas may be overvalued by 17.9%. Discover 61 high quality undervalued stocks or create your own screener to find better value opportunities.
Approach 2: ONE Gas Price vs Earnings
For a profitable company like ONE Gas, the P/E ratio is a straightforward way to compare what you are paying for each dollar of earnings. Investors usually accept a higher or lower P/E depending on how they view a company’s growth potential and risk profile, so there is no single “correct” number, just a range that fits those expectations.
ONE Gas currently trades on a P/E of 20.36x. That sits above the Gas Utilities industry average of 14.87x and slightly above the peer average of 19.00x. To refine this, Simply Wall St uses a proprietary “Fair Ratio” model, which estimates that a P/E of 19.59x would be more in line with ONE Gas’ characteristics.
This Fair Ratio goes beyond simple peer or industry comparisons because it incorporates factors such as earnings growth, profit margins, company size and specific risk indicators, all within the context of its sector. Comparing the current P/E of 20.36x to the Fair Ratio of 19.59x suggests the shares are trading a bit richer than what this framework would indicate.
Result: OVERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.
Upgrade Your Decision Making: Choose your ONE Gas Narrative
Earlier it was mentioned that there is an even better way to think about valuation. Narratives on Simply Wall St’s Community page let you attach a clear story about ONE Gas to the numbers by linking your view of its future revenue, earnings and margins to a forecast, comparing your Fair Value to today’s price to help timing decisions, and then updating that view automatically as fresh news or earnings arrive. This is why one investor might build a bullish Narrative closer to US$105 that leans on steady regional growth and supportive regulation, while another might anchor around US$78 and focus more on high capital spending, regional concentration and long term decarbonization risks.
Do you think there's more to the story for ONE Gas? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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