It has been about a month since the last earnings report for The Williams Companies, Inc. (NYSE:WMB) . Shares have added about 4% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is WMB due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Williams Companies reported first-quarter 2018 adjusted earnings from continuing operations of 19 cents per share, missing the Zacks Consensus Estimate of 21 cents. The weaker-than-expected results can be attributed to absence of gains associated with transactions related to JV interests in the Permian basin and Marcellus shale. Lower commodity margins due to the sale of Geismar olefins facility also impacted the results.
However, the bottom line improved from the prior-year figure of 14 cents per share.
For the quarter ended Mar 31, 2018, Williams Companies reported revenues of $2,088 million, beating the Zacks Consensus Estimate of $2,078 million. Further, revenues increased significantly from the year-ago quarter figure of $1,988 million.
Williams Partners L.P.: This segment reported adjusted operating profit of $1,122 million, slightly higher than $1,117 million recorded in the year-ago quarter. Increased fee-based revenues driven by the partnership’s Transco’s expansion and higher gathered volumes drove the results.
Other: The segment posted adjusted operating profit of $13 million, below the prior-year profit of $28 million.
The total cost and expenses increased 2.5% to $1,597 million in the reported quarter, compared with $1,558 million in the prior-year quarter. Increased costs were primarily driven by higher product costs and processing commodity expenses.
Capital Expenditure & Balance Sheet
During the reported quarter, Williams Companies’ capital expenditure was $957 million. As of Mar 31, 2018, the company had cash and cash equivalents of $1,292 million. Long-term debt of the company was $21,397 million, representing a debt-to-capitalization ratio of 69.3%.
The guidance for 2018 remains unchanged from the prior outlook. The company anticipates net income from its major segment Williams Partners to be within the range of $1.5-$1.7 billion. Williams Companies expects the annual dividend growth rate of 10-15% for 2018 and 2019, with the dividend-coverage ratio of 1.35x.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower.
At this time, WMB has an average Growth Score of C, however its Momentum is doing a bit better with a B. The stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, WMB has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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