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Why Is Williams Companies, Inc. The (WMB) Down 5.6% Since Last Earnings Report?

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It has been about a month since the last earnings report for Williams Companies, Inc. The (WMB). Shares have lost about 5.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Williams Q3 Earnings Beat Estimate, Increase Y/Y

Williams reported third-quarter 2021 adjusted earnings per share (EPS) of 34 cents, beating the Zacks Consensus Estimate of 28 cents and the year-ago bottom line of 27 cents. This outperformance can be attributed to impressive contributions from all the three segments of the company.

For the quarter ended Sep 30, revenues of $2.48 billion surpassed the Zacks Consensus Estimate by 6.42%. Moreover, the same increased from the year-ago figure of $1.93 billion.

Takeaways

Adjusted EBITDA was $1.420 billion in the quarter under review, reflecting an increase of 12% from the level in the corresponding period of 2020. Cash flow from operations totaled $834 million compared with $452 million in the prior-year period.

Segmental Analysis

Transmission & Gulf of Mexico: Comprising Williams’ massive Transco pipeline system and the Northwest Pipeline, the segment generated adjusted EBITDA of $630 million, higher than the year-ago quarter’s $622 million. Gains in service revenues, healthy commodity margins and higher equity-method investment contributions drove the results.

West: This segment includes gathering and processing assets in the Western region of the United States. It delivered an adjusted EBITDA of $293 million, which is 19.6% higher than $245 million recorded in the year-earlier quarter. Results were attributable to increased commodity margins and decreased operating and administrative expenses.

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 an adjusted EBITDA of $442 million, up 11.6% from the prior-year quarter’s $396 million. Increased gathering volumes and advantages of expanded ownership in Blue Racer Midstream boosted the results.

Costs, Capex & Balance Sheet

In the reported quarter, total costs and expenses increased 64.1% to $2.12 billion from $1.3 billion a year ago, primarily due to higher product expenses, operating and maintenance expenses as well as depreciation and amortization expenses.

Williams’ total capital expenditure was $272 million in the third quarter. As of Sep 30, 2021, the company had cash and cash equivalents worth $214 million and a long-term debt of $20.34 billion with a debt-to-capitalization of 64.5%.

2021 Guidance

The company projects full-year adjusted EBITDA in the range of $5.5-$5.55 billion. It reiterates its growth capital spending in the band of $1-$1.2 billion. It expects to generate a positive free cash flow, which will allow it to maintain its financial stability.

 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Williams Companies, Inc. The has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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