It has been about a month since the last earnings report for Williams Companies, Inc. The (WMB). Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Williams Companies, Inc. The due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Williams Q2 Earnings Beat Estimates, Revenues Miss Mark
The Williams Companies, Inc.reported second-quarter 2020 adjusted earnings per share of 25 cents, beating the Zacks Consensus Estimate of 23 cents, attributable to a strong contribution from the Northeast G&P unit. However, the bottom line marginally missed the year-earlier quarter's adjusted earnings of 26 cents due to weak contribution from the Transmission & Gulf of Mexico and West segments.
The energy infrastructure provider’s quarterly revenues of $1.78 billion also lagged the Zacks Consensus Estimate by 4.23% and decreased from the year-ago figure of $2.04 billion as well.
Distributable cash flows came in at $797 million, down 8.07% from the year-ago number of $867 million. Adjusted EBITDA was $1.24 billion in the quarter under review, in line with the year-ago quarter’s figure. Cash flow from operations totaled $1.14 billion compared with $1.07 billion in the prior-year period. Lower maintenance capital drove cash flow in the quarter.
Transmission & Gulf of Mexico: Consisting of Williams’ Transco Pipeline and assets in the Gulf Coast area, the segment generated adjusted EBITDA of $617 million, down 1.75% from $628 million in the year-ago quarter. This underperformance was caused by depressed service revenues from lower deferred revenue amortization at Gulfstar One. Apart from declining revenues, a number of temporary production shut-ins across the Gulf of Mexico induced by weak oil prices, maintenance and Tropical Storm Cristobal hampered segment profitability.
West: This segment includes the Northwest pipeline and operations in various regions, such as Colorado, Mid-Continent and Haynesville Shale among others. It delivered adjusted EBITDA of $252 million, 12.2% lower than the year-earlier figure of $287 million. Soft revenues in Barnett Shale affected the results.
Northeast G&P: Engaged in natural gas gathering and processing along with the NGL fractionation business in Marcellus and Utica shale regions, the segment generated adjusted EBITDA of $363 million, up 13.8% from the prior-year quarter’s $319 million. Expanded volumes from the new Northeast JV along with added ownership in Utica East Ohio Midstream boosted results. Moreover, cost-minimizing efforts aided segmental profitability.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses decreased to $1.17 billion from $1.54 billion a year ago owing to fall in product expenses and G&A costs.
Williams’ total capital expenditure was $613 million in the second quarter, down substantially from $919 million a year ago. As of Jun 30, 2020, the company had cash and cash equivalents worth $1.13 billion and a long-term debt of $22.3 billion with a debt-to-capitalization of 64.6%.
The company anticipates full-year adjusted EBITDA in the lower end of its earlier guided range of $4.95-$5.25 billion. Growth capex view for the year is now expected in the $1-$1.2 billion band, lower than the earlier-issued $1.1-$1.3 billion range.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 8.83% due to these changes.
At this time, Williams Companies, Inc. The has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Williams Companies, Inc. The has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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