ONE Gas offers a discounted, fully regulated rate-base compounding story, with 7%–9% growth, large-load catalysts, and leverage and regulatory risks tempering an otherwise attractive defensive return profile.
Overview
ONE Gas is a 100%-regulated natural gas distribution utility serving more than 2.3 million customers across Oklahoma, Kansas, and Texas through Oklahoma Natural Gas, Kansas Gas Service, and Texas Gas Service. Its regulated pass-through model removes commodity-price markup risk, leaving rate-base expansion, approved returns, customer growth, and fixed charges as the core earnings drivers. **The rate base is expected to grow from $5.8 billion in 2025 to $6.3 billion in 2026**, supporting long-term adjusted net income growth of 7%–9% and adjusted EPS growth of 5%–7%. Q2 2026 adjusted EPS rose 52% year over year to $0.82 and exceeded consensus by $0.17–$0.19; management raised 2026 adjusted EPS guidance to $4.89–$4.95. Three large-load projects add $15 million of annual revenue on $175 million of capex, with a potential 3 GW pipeline. At $81.39, OGS trades at 17.5x trailing P/E versus Atmos Energy at 20.5x, although leverage is higher at 5.5x net debt/EBITDA. The report’s probability-weighted five-year price target is $112.88, with guidance, regulatory recovery, project execution, and analyst upgrades as near-term catalysts.