Oklahoma-based energy infrastructure provider The Williams Companies, Inc. WMB recently hiked its quarterly dividend by 50% to 30 cents per share. The increased dividend will be paid on Mar 27, to shareholders on record as of Mar 10. Previously, the company had been paying a quarterly dividend of 20 cents per share since third-quarter 2016.
Impressive fourth-quarter earnings on the back of significant cost reductions and improvement in financial position has provided Williams Companies the financial flexibility to hike the dividend.
The company reported strong fiscal fourth quarter-quarter 2016 results, wherein both earnings and revenues beat the respective Zacks Consensus Estimate. Adjusted earnings of 17 cents per share surpassed the Zacks Consensus Estimate of 16 cents. Revenues of $2.19 billion beat the consensus mark of $1.8 billion and improved from the prior-quarter figure of $2 billion. The company’s cash and cash equivalents were pegged at $170 million at the end of the quarter compared with the prior-quarter figure of $70 million.
Williams Companies manages and markets a variety of energy products, including natural gas, liquid hydrocarbons, petroleum and electricity. The company presently carries a Zacks Rank #5 (Strong Sell).
Despite the solid fourth-quarter results, we remain bearish on the stock’s prospects as the company faces a huge financial risk due to a long-term debt of $22,624 million resulting to a high debt-to-capitalization of around 83%. We are also worried about the volatility in natural gas prices, which recently went below $3 levels, affecting transportation volumes adversely. The termination of the Energy Transfer merger deal has also been a major dampener for the company.
In the last three months, the Zacks categorized Oil and Gas Production & Pipeline industry has recorded increase of 3.7%. However, shares of Williams Companies have significantly underperformed the industry by declining around 9%.
Some better-ranked players in this industry include TransCanada Corporation TRP, Semgroup Corporation SEMG and Ultra Petroleum Corp. UPLMQ.
TransCanada Corporation and Semgroup Corporation carry a Zacks Rank #2 (Buy), whereas Ultra Petroleum Corp. has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
TransCanada Corporation has reported average positive earnings surprise of 1.56% in the four quarters.
Semgroup Corporation is expected to post year-over-year growth of 1028.57% on its earnings in 2017.
Ultra Petroleum is expected to report revenue growth of 57.7% in 2017.
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