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Valens Research

OGE - Embedded Expectations Analysis - 2022 05 18

OGE Energy Corp. (OGE) currently trades above corporate and historical averages relative to Uniform earnings, with a 42.5x Uniform P/E (Fwd. V/E').

At these levels, markets are pricing in expectations for Uniform ROA to compress to 6%, accompanied by 3% Uniform asset growth.

Meanwhile, analysts expect Uniform ROA to fall to 2% by 2023, accompanied by 2% Uniform asset growth.

If sustained going forward, these levels would imply a stock price closer to $6, representing significant potential equity downside for the firm.

Moreover, the firm's most recent earnings call suggests management may have concerns about their investment strategy and macroeconomic indicators.
Underlying
OGE Energy Corp.

OGE Energy is a holding company. Through its subsidiaries, the company is an energy and energy services provider providing physical delivery and related services for both electricity and natural gas primarily in the south central United States Co. conducts these activities through two business segments: electric utility, which generates, transmits, distributes and sells electric energy in Oklahoma and western Arkansas; and natural gas midstream operations, which consist of the company's investment in Enable Midstream Partners, LP, which is primarily engaged in the business of gathering, processing, transporting and storing natural gas.

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Valens Research
Valens Research

In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:

  • GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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Many years later, our business model remains because little has changed on Wall Street.

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