OKE

ONEOK ($OKE) Director Buys $250K in Shares After 36% Decline...Bottom Signal?

11/05/2025 21:28

Natural gas midstream infrastructure giant ONEOK ($OKE) is drawing investor attention following a significant insider purchase. Director Brian Derksen acquired $250,000 worth of company shares on November 3rd at $66 per share, nearly matching current price levels and suggesting insiders view this as a buying opportunity. ONEOK, established in 1906, operates one of North America's largest integrated energy infrastructure networks spanning approximately 60,000 miles of pipelines. The company provides midstream energy infrastructure services including natural gas gathering, processing, and transportation, natural gas liquids (NGL) fractionation and storage, and refined products transportation. With operations across key U.S. energy-producing regions including the Permian Basin, Rocky Mountains, and Gulf Coast, the Tulsa-based company employs 5,177 people and maintains a $40.5 billion market capitalization. Derksen's purchase carries significant timing implications. ONEOK shares soared to $114 in November 2024 but have since declined persistently to current levels around $72-73, representing approximately a 36% drop from peak levels. The stock particularly struggled after a sharp April 2025 decline from $91 to $79, with little recovery since. An insider purchase at current price levels suggests potential bottom-fishing by those with intimate company knowledge. Company fundamentals remain robust despite stock weakness. Q3 2025 revenue surged 71.9% year-over-year to $8.63 billion, while earnings per share of $1.49 beat Wall Street consensus estimates of $1.46. Growth was broad-based with natural gas gathering and processing revenue jumping 103.4%, pipeline revenue up 163.2%, and refined products and crude revenue soaring 276.8%. The company maintains an annual dividend of $4.12 per share, yielding an attractive 6.3% at current prices. Stock underperformance stems from broader energy sector headwinds rather than company-specific issues. Chinese economic slowdown concerns and U.S. tariff policy uncertainties have weighed on crude oil and natural gas demand projections throughout 2025. The S&P 500 Energy Index has faced persistent selling pressure, with the entire sector experiencing investor rotation away from energy names. ONEOK's Q3 revenue also missed consensus estimates by 14%, adding to disappointment. Long-term prospects appear more constructive. Natural gas demand is expected to reach record levels driven by data center power requirements and LNG export growth. Artificial intelligence power consumption and liquefied natural gas export expansion serve as primary growth catalysts. U.S. LNG export capacity is projected to nearly double by 2028. ONEOK is actively participating through a joint venture with MPLX to construct a $1.4 billion LPG export terminal in Texas, targeting early 2028 operations. From an investment perspective, valuation metrics present compelling attraction. The price-to-earnings ratio of 12.18x trades below the industry average of 15x, while enterprise value-to-sales of 2.79x and enterprise value-to-EBITDA of 10.74x appear reasonable relative to midstream peers. The 6.3% dividend yield appeals to income investors in the current environment. Risks warrant consideration. The 152% debt-to-equity ratio creates interest rate sensitivity concerns. Commodity price volatility and regulatory exposure remain ongoing headwinds. Near-term energy sector sentiment recovery appears necessary for meaningful stock appreciation. Key upcoming catalysts include quarterly earnings releases and energy policy developments. The Trump administration's energy policy direction and Chinese economic recovery timing represent crucial variables. The company's ongoing infrastructure investments and M&A activity will also influence long-term growth trajectories. While insider buying provides a positive signal, energy sector structural uncertainties persist. The combination of dividend yield and valuation attraction merits long-term consideration for income-focused investors, though near-term volatility tolerance remains essential.