Williams Companies, Inc. (The) (WMB) Up 0.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Williams Companies, Inc. (The) (WMB). Shares have added about 0.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Williams Companies, Inc. (The) 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 catalysts.
Williams Q2 Earnings Outpace Estimate, Sales miss
The Williams Companies reported second-quarter 2023 adjusted earnings of 42 cents per share, which beat the Zacks Consensus Estimate of 39 cents. The bottom line also surpassed the year-ago period’s reported figure of 40 cents due to higher-than-expected contributions from two major segments — West and Northeast G&P.
Williams’ revenues of $2.48 billion missed the Zacks Consensus Estimate of $2.69 billion due to lower product sales. The top line also decreased from the year-ago quarter’s reported figure of $2.49 billion.
Key Takeaways
Adjusted EBITDA was $1.61 billion in the quarter under review, up 7.3% from the prior-year quarter’s level. The figure also beat our estimate of $1.53 billion. Cash flow from operations totaled $1.38 billion, up 25.5% from that recorded in the corresponding quarter of 2022.
Segmental Analysis
Transmission & Gulf of Mexico: The segment reported an adjusted EBITDA of $748 billion, up 14.7% from the year-ago quarter’s level. This was largely driven by much higher service revenues. The figure also outpaced our prediction of $636.5 million.
West: This segment registered an adjusted EBITDA of $312 million, 5.4% higher than $296 million recorded in the year-earlier quarter. The figure also beat our estimate of $303.3 million. The improvement resulted from contributions from Trace Midstream and the benefits of realized gains on natural gas hedges.
Northeast G&P: Adjusted EBITDA for this segment was $515 million, up 14.4% from the prior-year quarter’s $450 million. The figure also beat our estimate of $442.5 million. This uptick in performance can be attributed to higher volumes at Ohio Valley Midstream, Marcellus South and Cardinal.
Gas & NGL Marketing Services: This unit generated an adjusted EBITDA loss of 16 million against a profit of $6 million in the year-ago quarter. This was due to low commodity margins. The reported figure missed our predicted profit of $51.9 million.
Costs, Capex & Balance Sheet
Total costs and expenses were $1.61 billion in the reported quarter.
Total capital expenditure was $715 million compared with $429 million a year ago. As of Jun 30, 2023, the company had cash and cash equivalents of $551 million, and a long-term debt of $21.53 billion, with a debt-to-capitalization of 60.2%.
Guidance
WMB expects full-year adjusted EBITDA to be in the range of $6.4-$6.8 billion. Growth capital spending is anticipated to be in the band of $1.6-$1.9 billion. Williams expects to achieve a leverage ratio mid-point of 3.65. The dividend guidance for 2023 increased 5.3% on an annualized basis to $1.79 from $1.70 per share in 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
Currently, Williams Companies, Inc. (The) has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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.
Performance of an Industry Player
Williams Companies, Inc. (The) belongs to the Zacks Oil and Gas - Production and Pipelines industry. Another stock from the same industry, MPLX LP (MPLX), has gained 1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
MPLX LP reported revenues of $2.69 billion in the last reported quarter, representing a year-over-year change of -8.5%. EPS of $0.91 for the same period compares with $0.83 a year ago.
For the current quarter, MPLX LP is expected to post earnings of $0.90 per share, indicating a change of -6.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +2.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for MPLX LP. Also, the stock has a VGM Score of B.
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