Breaking Down ONE Gas, Inc. (OGS) Financial Health: Key Insights for Investors

You're looking at ONE Gas, Inc. (OGS), a regulated natural gas utility, and wondering how the 2025 numbers stack up against a choppy market. The direct takeaway is that while OGS remains a stable, low-beta play, its growth is defintely tied to regulatory approvals and capital spending efficiency, which is where the near-term risk sits. Analyst consensus for the 2025 fiscal year projects revenue to hit approximately $1.85 billion, a modest 5.7% increase, and earnings per share (EPS) is forecast at $4.65. That's steady, but not explosive.

Here's the quick math: OGS is planning a significant infrastructure modernization push, with a projected 2025 capital expenditure (CapEx) of nearly $750 million, mostly on pipeline replacement and safety upgrades-a necessary cost, but one that eats into near-term free cash flow (FCF). The stock is currently trading around $78.50, offering a reliable dividend yield of 3.8%, but the market is pricing in the regulatory lag on recovering these large CapEx costs. We need to look past the top-line stability and dig into the rate base growth and the regulatory environment in Oklahoma, Kansas, and Texas to see if this utility can truly maximize returns.

Revenue Analysis

You're looking at ONE Gas, Inc. (OGS) because you want a clear picture of its revenue stability and growth drivers. The direct takeaway is that as a regulated utility, OGS's revenue is fundamentally stable, but its growth in 2025 is being driven by deliberate regulatory wins-new rates-and strong customer additions in key markets.

For the trailing twelve months (TTM) ending mid-2025, ONE Gas, Inc. generated approximately $2.33 Billion in total revenue. This represents a solid year-over-year TTM revenue growth of around 6.6%, which is a good clip for a regulated natural gas distribution business. We defintely need to look past the top-line number to see where that growth is coming from.

Primary Revenue Streams: The Natural Gas Core

The vast majority of ONE Gas, Inc.'s revenue comes from a single, predictable source: the distribution and sale of natural gas to its residential, commercial, industrial, and transportation customers. This isn't a complex, multi-product tech company; it's a 100-percent regulated natural gas utility.

The revenue model is built on serving roughly 2.3 million customers across three core operating divisions: Oklahoma Natural Gas, Kansas Gas Service, and Texas Gas Service. The revenue structure is based on tariffs and rates approved by state regulatory authorities, which means revenue changes are often driven by successful rate case outcomes rather than just volume, though customer growth still matters.

• Primary source: Natural Gas sales and distribution.
• Customer base: Approximately 2.3 million total customers.
• Geographic segments: Oklahoma, Kansas, and Texas.

2025 Growth Drivers: New Rates and Customer Migration

The revenue increase you're seeing in 2025 isn't just organic; it's largely a result of regulatory action and population shifts. The company's operating income for the nine months ended September 30, 2025, showed a significant boost of $92.2 million from new rates alone. That's a huge, planned change.

Plus, net customer growth, especially in the booming markets of Oklahoma and Texas, contributed an additional $5.3 million in residential sales for the same nine-month period. The company is strategically focused on capital investments-like the expected $750 million in capital expenditures for 2025-to support system integrity and service expansion, which ultimately supports future rate base growth. This is how a utility grows: invest, get new rates, and add customers.

Here's the quick map of the revenue drivers:

What this estimate hides is the ongoing nature of regulatory risk; new rates are great, but they require continuous negotiation and approval. Still, the company is actively engaged in rate cases in all three states, with new rates expected to take effect in 2026, suggesting this revenue strategy is firmly in place.

To understand the players behind these numbers, you should check out Exploring ONE Gas, Inc. (OGS) Investor Profile: Who's Buying and Why?

Profitability Metrics

You want to know if ONE Gas, Inc. (OGS) is making money efficiently, and the short answer is yes: its profitability is stable and improving, which is exactly what you want from a regulated utility. The company's net profit margin is holding steady at approximately 10.8% for 2025, reflecting strong operational efficiency and the benefit of new rates.

For a 100% regulated natural gas utility like ONE Gas, Inc., standard profitability metrics like Gross Profit Margin need a different lens. Because the cost of natural gas is largely a pass-through cost (meaning the company is reimbursed by customers), changes in the commodity price don't impact the core operating income (OI). [cite: 2 in step 1] This means the Net Margin is actually the most relevant measure of how well the company is managing its regulated business and recovering its capital investments.

Here's the quick math on their 2025 performance, based on the latest guidance and trailing twelve months (TTM) data:

• Net Income Guidance: Expected to range between $262 million and $266 million for the full 2025 fiscal year, a tightened and positive outlook.
• Revenue (TTM): Approximately $2.33 billion USD, which is the top line before factoring in the major pass-through costs. [cite: 5 in step 1]
• Net Profit Margin: The reported net margin is approximately 10.8%, a slight increase over the prior year's 10.5%. [cite: 7 in step 1]

The operational efficiency story is strong. The year-to-date operating income through the third quarter of 2025 reached $317.7 million, a clear reflection of disciplined strategy execution. This growth is driven by new rates and net customer growth across Oklahoma and Texas, which helps offset higher operating expenses like depreciation from their capital investments.

Profitability Trends and Industry Comparison

Looking at the trend, ONE Gas, Inc. is defintely on the right track. Their annual earnings growth reached a robust 17.7%, substantially outpacing the company's five-year average of 4.5%. [cite: 7 in step 1] This jump shows the immediate positive impact of recent regulatory wins and customer additions.

When you compare ONE Gas, Inc. to the broader industry, you see a defensive, high-quality profile. The natural gas distribution industry in the US is projected to hit an estimated revenue of $222.5 billion in 2025, showing the scale of the market.

A key valuation metric, the Price-to-Earnings (P/E) ratio, offers a good comparison:

The slightly higher P/E ratio for ONE Gas, Inc. at around 19.45x compared to the S&P Utility Index average of 17.8x suggests the market is pricing in the company's regulatory stability and predictable earnings growth. [cite: 1 in step 1, 8 in step 1, 7] This is a premium for a defensive stock with high-quality, regulated cash flows. The company's long-term earnings per share (EPS) growth is targeted at 5.6%, which aligns well with the 6% to 9% annual EPS growth estimated for the broader utility sector through 2026. [cite: 11 in step 1, 3]

If you want to dive deeper into the full picture, check out the complete analysis: Breaking Down ONE Gas, Inc. (OGS) Financial Health: Key Insights for Investors.

Next Step: Focus your attention on the upcoming Q4 2025 earnings call for the final full-year Operating Income number, as this will confirm the efficiency gains suggested by the YTD figures.

Debt vs. Equity Structure

You need to know how ONE Gas, Inc. (OGS) funds its massive infrastructure projects, because that balance between debt and equity is the bedrock of its stability. The good news is that as of mid-2025, the company's leverage profile looks favorable, especially when considering the capital-intensive nature of the utility sector.

The company's total debt as of September 2025 sits at approximately $3.401 billion, a necessary figure for a regulated natural gas utility that must continually invest in its system integrity and expansion. This debt is split between short-term and long-term obligations, a critical distinction for liquidity analysis.

• Short-Term Debt (Sep. 2025): Approximately $1.045 billion.
• Long-Term Debt (Sep. 2025): Approximately $2.356 billion.

To be fair, the nature of this business-delivering natural gas to over 2.3 million customers in Kansas, Oklahoma, and Texas-requires a steady stream of capital for projects like pipeline replacement and system reinforcement, which are expected to total around $750 million in capital investments for 2025 alone.

Debt-to-Equity: A Favorable Balance

The most telling metric here is the Debt-to-Equity (D/E) ratio, which tells you how much debt the company uses to finance its assets relative to shareholder equity. As of June 30, 2025, ONE Gas, Inc.'s D/E ratio was approximately 0.74 (or 74%). This is a healthy figure, especially for a utility. Here's the quick math: with total equity around $3.18 billion, the debt load is less than the equity base.

Utilities are capital-intensive industries, meaning they often carry higher debt levels than, say, a software company. A D/E ratio below 1.0 is defintely a positive sign of conservative financing. While the broad utility sector has seen D/E ratios fluctuate, a ratio of 0.74 is well within the acceptable range and suggests less financial risk compared to companies with ratios exceeding 2.0 or 2.5.

Financing Strategy and Credit Health

ONE Gas, Inc. balances its financing needs by blending debt and equity to fund its capital plan. For the long-term, specifically through 2029, the company expects to fund its net long-term financing needs of roughly $1.5 billion with approximately 40% equity issuances, demonstrating a commitment to maintaining a balanced capital structure. Near-term, the company anticipates a short- and long-term financing need of $270 million to $300 million in 2025.

In terms of credit, a recent action by S&P Global Ratings saw the company's rating downgraded to 'BBB+'. While a downgrade is never ideal, a 'BBB+' rating still places the company in the lower-medium investment-grade category, meaning its capacity to meet its financial commitments is considered adequate. The company is actively managing its debt maturity schedule; for instance, after a debt issuance in August 2024, the next major maturity isn't until 2029. This staggered maturity schedule helps reduce refinancing risk.

To dive deeper into who is buying this equity, check out Exploring ONE Gas, Inc. (OGS) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You're looking at ONE Gas, Inc. (OGS) and its ability to cover near-term obligations, and the picture, while typical for a regulated utility, demands a clear-eyed look at the numbers. The company's liquidity position, measured by its current and quick ratios, is defintely tight, but this is largely a function of the business model, not necessarily a crisis.

For a utility like ONE Gas, Inc. (OGS), low liquidity ratios are common because they carry a large amount of property, plant, and equipment-long-term assets-and can reliably recover costs through regulated rates, making immediate cash on hand less critical than for a retail business. Still, the numbers are stark. As of a recent 2025 measurement, the Current Ratio sits at approximately 0.47, and the Quick Ratio (acid-test ratio) is even lower at about 0.33.

Current and Quick Ratios: A Utility-Specific View

A Current Ratio below 1.0 means current liabilities exceed current assets, suggesting the company can't cover all its short-term debt with its short-term assets. Here's the quick math using the September 30, 2025, figures: Total Current Assets were approximately $679.207 million, while Total Current Liabilities were much higher at $1,453.934 million. This results in a negative working capital position.

• Current Ratio: 0.47 (Current Assets / Current Liabilities)
• Quick Ratio: 0.33 (Excludes inventory and natural gas in storage)
• Negative Working Capital: -$774.727 million

The Quick Ratio is even lower because it strips out less-liquid assets like natural gas in storage and materials, which totaled about $295.498 million in Q3 2025. This low ratio highlights a reliance on cash generation or external financing to meet immediate, non-operational liabilities like short-term debt and notes payable, which were a significant component of current liabilities at $764.400 million.

Cash Flow Statement Overview and Trends

The true story for a utility is always in the cash flow, and here, ONE Gas, Inc. (OGS) shows its operational strength but also its capital demands. For the trailing twelve months (TTM) ended September 30, 2025, the company generated strong cash flow from operations (CFO) of about $598.45 million. This is the lifeblood of the company, showing the cash generated from selling natural gas and providing service.

However, the utility business is capital-intensive. The Cash Flow from Investing Activities (CFI) reflects massive capital expenditures (CapEx) for system integrity, expansion, and service extensions. Total CFI for the TTM period was a substantial outflow of -$729.12 million, driven by CapEx of -$719.01 million. This net outflow means operating cash flow alone cannot fund the company's infrastructure investment needs.

The gap between CFO and CFI is bridged by Cash Flow from Financing Activities (CFF). The company is actively managing its capital structure, expecting a short- and long-term financing need of $270-$300 million for the 2025 fiscal year. This CFF activity includes issuing debt and equity, and, importantly, paying a consistent dividend, which was recently declared at $0.67 per share quarterly. This predictable cycle of strong operating cash flow, high capital investment, and reliance on financing is the standard operating procedure for a regulated utility. You can read more about their long-term focus on the Mission Statement, Vision, & Core Values of ONE Gas, Inc. (OGS).

Potential Liquidity Concerns and Strengths

The primary strength is the stability of its operating cash flow, underpinned by its regulated status. The biggest risk is a sudden, unexpected need for a large injection of cash that exceeds its short-term borrowing capacity, especially if capital markets tighten. The low liquidity ratios signal that ONE Gas, Inc. (OGS) is not built to withstand a major, unrecoverable operational shock without immediately tapping credit lines or issuing new capital. But, as a regulated entity, its cash flow is relatively predictable, and its financing needs are well-telegraphed. They expect capital expenditures, including asset removal costs, to be approximately $750 million in 2025, a figure that anchors their financing strategy. The liquidity position is a structural reality, not a sign of operational distress.

Here is a snapshot of the cash flow trends (TTM Sep 30, 2025):

Finance: Monitor the short-term debt and notes payable balances quarterly to ensure they don't spike unexpectedly outside of seasonal working capital needs.

Valuation Analysis

You're looking at ONE Gas, Inc. (OGS) and asking the core question: Is this utility overvalued, undervalued, or priced just right? The quick answer is that ONE Gas is currently trading near its analyst-consensus fair value, suggesting it is neither a screaming buy nor an obvious short, but rather a stable investment in the regulated natural gas distribution space. The stock has seen solid price momentum over the last year, but its valuation multiples suggest a slight premium for its stability.

As of November 2025, the stock is trading around the $80.41 mark, which is a 7.47% price increase over the last 12 months. This puts it close to its 52-week high of $83.39, a sign of investor confidence following its updated FY 2025 earnings per share (EPS) guidance of $4.34 to $4.40. That range is defintely a tight one, which you expect from a regulated utility.

Key Valuation Multiples (FY 2025)

To gauge the valuation, we look at three core ratios. The Price-to-Earnings (P/E) ratio shows how much you pay for each dollar of earnings, while the Price-to-Book (P/B) ratio is critical for capital-intensive utilities. Enterprise Value-to-EBITDA (EV/EBITDA) gives the clearest picture of the total company value relative to its operating cash flow before non-cash charges.

Dividend Profile and Analyst Outlook

For a utility like ONE Gas, Inc. (OGS), the dividend is a huge part of the total return story. The company pays an annualized dividend of $2.68 per share, resulting in a healthy dividend yield of 3.33% as of mid-November 2025. This dividend is safe because the payout ratio is a reasonable 62.2% of earnings, meaning they retain almost 40% of profits for reinvestment in the business, which is a sustainable model for growth.

Analyst sentiment confirms the stock is properly valued right now. The consensus view from seven brokerage firms is an 'Outperform' or 'Buy' rating, but the average price target of $82.64 is only a small premium to the current price. Here's the quick math on the range:

• Consensus Price Target: $82.64
• Most Bullish Target: $99.00
• Most Bearish Target: $66.00

What this estimate hides is the regulatory tailwind from supportive legislation in Texas, which is expected to drive higher earnings and could lead to positive earnings revisions in the near term. This is the catalyst that could push the stock toward the higher end of that range. If you want a deeper dive into who is buying and why, check out Exploring ONE Gas, Inc. (OGS) Investor Profile: Who's Buying and Why?

Risk Factors

You're looking at ONE Gas, Inc. (OGS) because it's a regulated utility, which usually means stable, predictable returns. That's generally true, but even a defensive stock like OGS has near-term risks that can impact its $5.8 billion average rate base and its ability to hit its narrowed 2025 net income guidance of $262 million to $266 million. To be fair, the company is managing these well, but you need to know where the pressure points are.

The biggest external risks for ONE Gas, Inc. are the ones they can't defintely control: commodity price volatility, interest rate risk, and the regulatory environment. Because the company is 100% regulated, any delay in rate case approvals-like the new rates expected in 2026 from 2025 filings in Texas, Kansas, and Oklahoma-can create an immediate earnings lag. Also, as a natural gas distributor, they face competition from other clean energy sources, which could slow down customer growth over the long term.

Operationally and financially, a few key risks stand out in the 2025 data. The core challenge is the classic utility capital spend versus revenue growth problem. Here's the quick math: ONE Gas, Inc. expects to spend approximately $750 million on capital investments in 2025, primarily for system integrity and replacement projects. That's a huge commitment, but analysts note that annual revenue is forecast to grow at only about 1.1% per year, raising the risk that consistently rising capital and operating costs could outpace future sales growth. That's a real margin squeeze.

• Higher operating expenses: Depreciation, ad valorem taxes, and employee-related costs all saw increases in the nine months ended September 30, 2025.
• Financing needs: The capital-intensive nature of the business means access to capital markets for debt obligations is crucial.
• Valuation: The stock is currently trading slightly above some fair value estimates, which limits near-term upside.

The good news is that management has clear mitigation strategies in place. The massive capital spending-that $750 million-is actually a core mitigation strategy; it's directed toward pipeline integrity and system replacement, which enhances safety, reliability, and justifies future rate base increases. Plus, the company uses revenue protection strategies like weather normalization mechanisms, which largely mitigate the risk of seasonal demand swings. Favorable regulation, such as Texas House Bill 4384, also makes it easier to recover capital expenditures, which bolsters their defensive position. That's a strong backstop.

For a deeper dive into the company's financial stability, check out the full post: Breaking Down ONE Gas, Inc. (OGS) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking at ONE Gas, Inc. (OGS) and wondering where the real growth comes from in a regulated utility business. The direct takeaway is this: their growth isn't about chasing volatile commodity prices; it's a predictable, capital-intensive play driven by infrastructure investment and favorable rate case outcomes, especially in their high-growth markets.

The company is a 100% regulated natural gas distribution utility, which is its primary competitive advantage. This model, where rates are set by regulatory commissions, shields them from the kind of wild revenue swings you see in non-regulated energy firms. Plus, over 92% of their customer base is residential, which gives them a stable, visible earnings stream. That's a defintely solid foundation for any investor looking for defensive growth.

Strategic Capital Deployment and Market Expansion

The core of ONE Gas, Inc.'s growth strategy is its massive capital expenditure (CapEx) program. For the 2025 fiscal year alone, the company expects total capital investments, including asset removal costs, to be approximately $750 million. A significant portion of this investment, around $180 million, is specifically earmarked for customer growth and system extensions, mostly in Texas and Oklahoma where economic development is robust.

Here's the quick math: this CapEx supports an estimated average annual rate base growth (the value of assets on which the company is permitted to earn a return) of 7% to 9% through 2029. This is the engine of their long-term value creation. Over the five-year period ending 2029, total capital spending is projected to be around $4.0 billion, with roughly $1.0 billion dedicated to growth capital. This consistent investment in system integrity and expansion is what drives their ability to secure new rate increases.

• Invest in system integrity; secure rate base growth.
• New rates in Oklahoma, Kansas, and Texas boost annual revenue.
• Proximity to gas reserves cuts transportation costs.

Future Revenue and Earnings Estimates

The company's focused strategy translates into clear financial guidance for 2025. Based on the latest update from early November 2025, ONE Gas, Inc. narrowed its full-year diluted earnings per share (EPS) guidance to a range of $4.34 to $4.40 per share. The midpoint of that guidance, $4.37, reflects the benefit of new rates and continued customer additions.

For net income, the 2025 forecast is between $262 million and $266 million. Looking further out, management expects long-term annual net income growth to average 7% to 9% through 2027, with diluted EPS growth averaging 4% to 6% through 2029. They expect to hit the high end of these ranges, which is a confident outlook for a utility.

M&A and Economic Tailwinds

Beyond organic growth, ONE Gas, Inc. is positioned for potential inorganic moves. In August 2025, the company secured a $250 million unsecured term loan facility, and one stated purpose for those funds is to support mergers and acquisitions (M&A). While no specific deal is announced, having that capital ready is a clear signal of their intent to consolidate or expand their regulated footprint.

Also, the economic vitality in their service territories is a massive, external growth driver. Since 2021, nearly $25 billion in new manufacturing projects have been announced across their operating areas, which will translate directly into new industrial and commercial customers, driving system expansion and further rate base growth. For a deeper dive into the valuation and risks, check out Breaking Down ONE Gas, Inc. (OGS) Financial Health: Key Insights for Investors.