Williams Cos a Tremendous Value

The Williams Companies, Inc. (WMB - Analyst Report) is an energy company that primarily finds, produces, gathers, processes, and transports natural gas. The company divides its business into four segments: Exploration & Production (E&P), Midstream Gas & Liquids, Gas Pipeline, and Gas Marketing Services.

In response to the drop in the stock price, management has indicated willingness to consider splitting the company into separate entities, with a final decision expected in the first quarter of 2009. While theoretically the plan makes sense, we do not think that the move will result in value creation given the current unfavorable macro backdrop.

Management has lowered guidance and capex budget for next year, largely in response to the commodity-price weakness. We are reiterating our Buy recommendation, but lowering our estimates and price objective.

Read the full analyst report on WMB.