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Things You Must Note Ahead of Williams' (WMB) Q1 Earnings

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The Williams Companies, Inc. WMB is set to release first-quarter 2021 results after the closing bell on Monday, May 3. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 28 cents per share on revenues of $2.05 billion.

Let’s delve into the factors that might have influenced the company’s performance in the March quarter. But it’s worth taking a look at Williams’ previous-quarter performance first.

Highlights of Q4 Earnings & Surprise History

In the last-reported quarter, the energy infrastructure provider missed the consensus mark owing to hurricane-related disruptions and negative repercussions from customer bankruptcies. Williams had reported adjusted earnings per share of 31 cents, lagging the Zacks Consensus Estimate by a penny. However, revenues of $2.1 billion generated by this firm had come in above the Zacks Consensus Estimate of $2 billion on the back of service revenue gains from the expansion projects around the Transco pipeline system.

As far as earnings surprises are concerned, Williams beat the Zacks Consensus Estimate in two of the last four quarters, missed in one and met in the other, delivering an earnings surprise of 2.40%, on average. This is depicted in the graph below:

Williams Companies, Inc. The Price and EPS Surprise

Williams Companies, Inc. The Price and EPS Surprise
Williams Companies, Inc. The Price and EPS Surprise

Williams Companies, Inc. The price-eps-surprise | Williams Companies, Inc. The Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the first-quarter bottom line remained the same in the last seven days. Moreover, the estimated figure indicates a 7.69% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 7.09% increase from the year-ago period.

Factors to Consider This Quarter

Thanks to the expansion projects around Transco (the country's largest gas transmission system and Williams’ core project) being placed into service in over the past few years and the additional volumes from these takeaway infrastructures on the back of record drilling activity, the company is likely to have experienced continued strength in Transmission & Gulf of Mexico segment earnings in the first quarter. As a reflection of this, the Zacks Consensus Estimate for the unit’s adjusted EBITDA is pegged at $681 million, indicating an increase of 1.8% year over year.

On the other hand, the Northeast G&P unit is expected to reflect the impact of higher volumes triggered by rising natural gas production from Marcellus and Utica shales. In fact, the Zacks Consensus Estimate for the segment’s to-be-reported quarter stands at $397 million, implying a 7.3% increase from $370 million in the January-March period of 2020.

However, on a somewhat bearish note, the pipeline company is likely to have faced the repercussions from upstream shut-ins due to the severe winter weather in February. Further, Williams experienced some outage in the Oklahoma, Texas and Louisiana areas on its gathering system that might have dented the company’s revenues and cash flows.

What Does Our Model Say?

The proven Zacks model does not conclusively show that Williams is likely to beat estimates in the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Williams has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 28 cents per share each.

Zacks Rank: Williams currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult for the company this earnings season.

Stocks to Consider

While an earnings beat looks uncertain for Williams, here are some firms from the energy space that you may want to consider on the basis of our model:

Exxon Mobil Corporation XOM has an Earnings ESP of +8.09% and a Zacks Rank #1. The firm is scheduled to release earnings on Apr 30.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Viper Energy Partners LP VNOM has an Earnings ESP of +40% and is Zacks #2 Ranked. The firm is scheduled to release earnings on May 3.

Transocean Ltd. RIG has an Earnings ESP of +7.41% and a Zacks Rank #3. The firm is scheduled to release earnings on May 3.

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