ONEOK: Deleveraging, Declining CapEx, And A Clear Path To Rerating
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The Alpha Analyst2.59K FollowersFollow5ShareSavePlay(10min)CommentsSummaryONEOK is a Buy, with depressed valuations and a clear path to deleveraging and declining capital intensity supporting a compelling total return thesis.OKE's solid dividend, covered at ~77% of free cash flow, provides downside protection as risk perception normalizes and cash flows strengthen.Management targets a ~3.5x leverage ratio by end-2026, requiring modest EBITDA growth and capex normalization, with operational leverage from recent project completions.Valuation rerating potential is significant; a move to 12x EV/EBITDA and modest EBITDA growth could drive ~55% share price upside within two years. Denis Shevchuk/iStock via Getty Images I recommend a Buy for ONEOK (OKE) because while valuations remain depressed, there is a visible path to deleveraging and declining capital intensity. For patient investors willing to wait as the risk perception normalizes, the solidThis article was written byThe Alpha Analyst2.59K FollowersFollowI am a stock analyst with over 20 years of experience in quantitative research, financial modeling, and risk management. My focus is on equity valuation, market trends, and portfolio optimization to uncover high-growth investment opportunities. As a former Vice President at Barclays, I led teams in model validation, stress testing, and regulatory finance, developing a deep expertise in both fundamental and technical analysis. Alongside my research partner (also my wife), I co-author investment research, combining our complementary strengths to deliver high-quality, data-driven insights. Our approach blends rigorous risk management with a long-term perspective on value creation. We have a particular interest in macroeconomic trends, corporate earnings, and financial statement analysis, aiming to provide actionable ideas for investors seeking to outperform the market.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.