Zacks Investment Research downgraded leading master limited partnership Williams Partners L.P. (WPZ) to Zacks Rank #5 (Strong Sell) on Mar 6.
Why the Downgrade?
Williams Partners witnessed sharp downward estimate revisions after reporting disappointing fourth-quarter 2012 results. In fact, the partnership delivered negative earnings surprises in the last 4 quarters with an average miss of 24.13%.
On Feb 20, 2013, Williams Partners registered fourth-quarter 2012 earnings of 42 cents per limited-partner unit, missing the Zacks Consensus Estimate of 52 cents. Earnings also deteriorated 60% from the year-ago profit level of $1.05.
Lower natural gas liquid (NGL) margins and higher costs related to developing new businesses purchased earlier in the year were responsible for the fall in earnings.
Consolidated adjusted segment profit was $449.0 million, down approximately 17.2% from the year-ago level of $542.0 million. In particular, Midstream Gas & Liquids segments’ profit decreased 32.4% year over year to $246.0 million.
Notably, Williams Partners' distributable cash flow (:DCF) attributable to the partnership’s operations in 2012 was $1.49 billion against $1.65 billion recorded in the year-ago period.
For 2013, most of the estimates (8 out of 10) were revised downward over the last 30 days, lowering the Zacks Consensus Estimate by 12.28% to $2.00 per unit.
Other Stocks to Consider
Not all energy stocks are performing as poorly as Williams Partners. The stocks of Range Resources Corp. (RRC), Enerplus Corporation (ERF) and NGL Energy Partners LP (NGL) are worth considering. All three carry a Zacks Rank #1 (Strong Buy).
More From Zacks.com