Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

On Jun 11, Zacks Investment Research downgraded Tulsa, Okla.-based, Williams Companies Inc. (WMB - Analyst Report) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Williams witnessed sharp downward estimate revisions after reporting disappointing first-quarter 2013 results. In fact, this leading North American energy firm delivered negative earnings surprises in 3 of the last 4 quarters with an average miss of 6.53%.

On May 7, 2013, Williams reported weak first-quarter 2013 results, hamstrung by a significant fall in natural gas liquid (NGL) margins. Earnings per share – excluding special items – came in at 22 cents, below the Zacks Consensus Estimate of 24 cents and also down from the year-ago adjusted profit of 39 cents.

Notably, Williams’ high debt level is a cause of concern. It leaves the company vulnerable to an extended drop in commodity prices. As of Mar 31, 2013, Williams had long-term debt of more than $10.6 billion, representing a debt-to-capitalization ratio of 68.9%.

Moreover, we believe that the transfer of the upstream assets (post-split) has left Williams with a less diversified business. As a result, the business risk profile of the reorganized Williams is weaker than it was prior to the spin-off.

A combination of all these factors has weighed on the earnings estimates for Williams in the last 60 days. The Zacks Consensus Estimate for the second quarter of 2013 has gone down by 19.0% to 17 cents per share while it dropped 19.4% to 79 cents per share for 2013.

Other Stocks to Consider

Not all energy production/pipeline entities are performing as poorly as Williams. The stocks of EQT Midstream Partners LP (EQM - Snapshot Report), Oiltanking Partners LP (OILT - Snapshot Report) and Atlas Energy LP (ATLS - Snapshot Report) are worth considering. All these stocks carry a Zacks Rank #1 (Strong Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%