Is ONEOK a Strategic Buy at a 50%+ Discount to DCF Fair Value?

The energy infrastructure sector has long been a battleground for value investors, but few names in 2025 have captured attention like ONEOK Inc. (OKE). With its stock trading at $71.51 as of November 26, 2025 according to market data, the company appears to be priced far below its intrinsic value, according to multiple discounted cash flow (DCF) models. These models, which project free cash flow (FCF) growth and long-term stability, suggest a fair value range of $103.76 to $154 per share based on DCF analysis, implying a 29% to 52.8% discount. This article examines whether ONEOK's current valuation reflects a strategic buying opportunity, supported by its robust cash flow potential and operational momentum.

DCF Valuation: A Compelling Case for Undervaluation

The most recent DCF analyses underscore a significant mispricing in ONEOK's shares. A 2025 model from Simply Wall St estimates an intrinsic value of $135.16 per share, based on projected FCF growth from $2.87 billion in the last twelve months to $4.50 billion by 2029. This implies a 52.4% discount to the current market price. Another analysis, using a base-case DCF model, arrives at $103.76 per share, suggesting a 45% undervaluation. While a third model from Gurufocus places intrinsic value at $57.94 according to analysis, this lower estimate likely reflects conservative assumptions about growth or discount rates. Collectively, these models highlight a consensus: ONEOK's cash flow trajectory is being underappreciated by the market.

The discrepancy in intrinsic value estimates underscores the importance of assumptions in DCF modeling. However, even the most conservative projections-such as the $103.76 base-case value-indicate a 29% discount to the current price. This margin of safety, combined with ONEOK's fee-based business model, which generates over 90% of earnings from fixed-fee contracts, strengthens the case for undervaluation.

Operational Strength and Long-Term Cash Flow Drivers

ONEOK's third-quarter 2025 results provide a glimpse into its operational resilience. The company reported net income of $940 million and adjusted EBITDA of $2.12 billion, driven by a 17% increase in Rocky Mountain region NGL throughput and the successful integration of the EnLink and Medallion acquisitions. These results affirm its full-year 2025 guidance, which projects adjusted EBITDA of $8.225 billion.

Long-term cash flow growth is further supported by organic projects such as the Bighorn natural gas processing plant and the Eiger Express Pipeline, which are expected to expand capacity and diversify revenue streams. Additionally, ONEOK's fee-based model insulates it from commodity price volatility, ensuring stable cash flows even in uncertain markets. Analysts project 7.5% annual earnings growth and 4.3% revenue growth through 2026, driven by deleveraging and capital efficiency improvements.

Analyst Sentiment and Risk Factors

While DCF models highlight undervaluation, analyst reports add nuance. The current consensus rating is "Moderate Buy," with an average price target of $89.27-21.3% above the current price according to Simply Wall St. Some analysts, including Goldman Sachs and Wells Fargo, have maintained or slightly raised their targets, citing improved leverage ratios and operational execution. However, others like Argus and Citigroup have downgraded, citing integration risks and commodity spread volatility.

Despite these risks, ONEOK's strategic focus on deleveraging and capital discipline mitigates downside. The company has returned $45 million to shareholders via share repurchases in Q3 2025 and maintains a quarterly dividend of $1.03 per share. For patient investors, the combination of a 50%+ discount to intrinsic value and a strong balance sheet creates a compelling risk-reward profile.

Conclusion: A Strategic Buy for Long-Term Investors

ONEOK's current valuation appears to reflect a temporary market oversight rather than a fundamental flaw in its business model. The DCF models, supported by strong operational execution and long-term cash flow drivers, suggest a significant margin of safety. While risks such as integration challenges and commodity volatility persist, the company's fee-based earnings, organic growth projects, and deleveraging efforts position it for a valuation rerating.

For investors with a multi-year horizon, ONEOK offers an attractive opportunity to capitalize on a 50%+ discount to intrinsic value. As the market recalibrates to its cash flow potential, shares could deliver substantial upside-particularly if the company continues to execute on its strategic priorities.