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Williams Companies, Inc. The (WMB) Up 5% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Williams Companies, Inc. The (WMB - Free Report) . Shares have added about 5% 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 the most recent earnings report in order to get a better handle on the important drivers.
Williams Q1 Earnings Beat Estimate
The Williams Companies reported first-quarter 2022 adjusted earnings per share of 41 cents, beating the Zacks Consensus Estimate of 36 cents and surpassing the year-earlier period’s profit by 6 cents.
The outperformance was due to higher-than-expected contributions from one major segment. Adjusted EBITDA from the Transmission segment totaled $697 million, ahead of the Zacks Consensus Estimate of $689 million. Adjusted EBITDA increased year over year by 4% in the Northeast G&P unit.
Meanwhile, in the quarter ended Mar 31, Williams’ revenues of $2.5 billion missed the Zacks Consensus Estimate of $3.2 billion and underperformed the last year’s first-quarter revenues of $2.6 billion, which could be attributed to lower-than-expected numbers in the Northeast G&P and West units.
Adjusted EBITDA was $1.51 billion in the quarter under review, reflecting an increase of 6.8% from the corresponding period of 2021. The cash flow from operations totaled $1 billion, up 18.2% from the prior-year period.
Segmental Analysis
Transmission & Gulf of Mexico: Comprising WMB’s massive Transco pipeline system and Northwest Pipeline, the segment generated adjusted EBITDA of $697 million, rising 5.6% from the year-ago quarter. This unit’s performance was largely driven by much higher service revenues from Transco’s recent in-service Leidy South expansion project.
West: This segment includes the gathering and processing assets in the Western region of the United States. It delivered adjusted EBITDA of $260 million, which is 17.1% higher than the $222 million recorded in the year-earlier quarter. The improvement in results was due to the benefits of higher commodity-based gathering and processing rates and greater Haynesville gathering volumes and favorable commodity margins.
Northeast G&P: Engaged in natural gas gathering and processing, along with the NGL fractionation business in the Marcellus and Utica shale regions, the segment generated adjusted EBITDA of $418 million, up almost 4% from the prior-year quarter’s $402 million. This uptick could be attributed to higher service revenues, primarily related to the gathering rate escalations in various systems in the Northeast.
Gas & NGL Marketing Services: This unit generated adjusted EBITDA of $65 million, down 30% from the prior-year quarter’s $93 million. This downside reflects a $57-million net unrealized loss in commodity derivatives, excluded from Adjusted EBITDA. Both measures were also impacted by the absence of a $58-million favorable impact of the Winter Storm Uri in 2021, which was offset by higher commodity margins and administrative costs associated with the Sequent business acquired in July 2021.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses remained almost the same as the year-ago quarter’s figure of $1.87 billion.
Williams’ total capital expenditure was $316 million in the first quarter, up from $277 million a year ago. As of Mar 31, 2022, the company had cash and cash equivalents of $604 million and a long-term debt of $20.8 billion, with a debt-to-capitalization of 59.8%.
2022 Guidance
WMB raised its full-year adjusted EBITDA guidance to the $5.9-$6.2 billion band from the earlier $5.6-$6 billion range, with growth capital spending in the range of $2.25 billion-$2.35 billion. Further, Williams expects to achieve a leverage ratio midpoint of 3.8, which, along with expectations to generate a positive free cash flow after dividends and capital expenditures (excluding the Trace acquisition of approximately $950 million), offers financial flexibility. The dividend guidance increased 3.7% on an annualized basis to $1.70 in 2022 from $1.64 in 2021.
The company anticipates maintenance capital expenditures between $650 million and $750 million, including the capital for emissions reduction and modernization initiatives.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 7.45% due to these changes.
VGM Scores
At this time, Williams Companies, Inc. The has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Williams Companies, Inc. The has a Zacks Rank #2 (Buy). We expect an above average 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, Kinder Morgan (KMI - Free Report) , has gained 5.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Kinder Morgan reported revenues of $4.29 billion in the last reported quarter, representing a year-over-year change of -17.6%. EPS of $0.32 for the same period compares with $0.60 a year ago.
For the current quarter, Kinder Morgan is expected to post earnings of $0.26 per share, indicating a change of +13% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.5% over the last 30 days.
Kinder Morgan has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Williams Companies, Inc. The (WMB) Up 5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Williams Companies, Inc. The (WMB - Free Report) . Shares have added about 5% 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 the most recent earnings report in order to get a better handle on the important drivers.
Williams Q1 Earnings Beat Estimate
The Williams Companies reported first-quarter 2022 adjusted earnings per share of 41 cents, beating the Zacks Consensus Estimate of 36 cents and surpassing the year-earlier period’s profit by 6 cents.
The outperformance was due to higher-than-expected contributions from one major segment. Adjusted EBITDA from the Transmission segment totaled $697 million, ahead of the Zacks Consensus Estimate of $689 million. Adjusted EBITDA increased year over year by 4% in the Northeast G&P unit.
Meanwhile, in the quarter ended Mar 31, Williams’ revenues of $2.5 billion missed the Zacks Consensus Estimate of $3.2 billion and underperformed the last year’s first-quarter revenues of $2.6 billion, which could be attributed to lower-than-expected numbers in the Northeast G&P and West units.
Adjusted EBITDA was $1.51 billion in the quarter under review, reflecting an increase of 6.8% from the corresponding period of 2021. The cash flow from operations totaled $1 billion, up 18.2% from the prior-year period.
Segmental Analysis
Transmission & Gulf of Mexico: Comprising WMB’s massive Transco pipeline system and Northwest Pipeline, the segment generated adjusted EBITDA of $697 million, rising 5.6% from the year-ago quarter. This unit’s performance was largely driven by much higher service revenues from Transco’s recent in-service Leidy South expansion project.
West: This segment includes the gathering and processing assets in the Western region of the United States. It delivered adjusted EBITDA of $260 million, which is 17.1% higher than the $222 million recorded in the year-earlier quarter. The improvement in results was due to the benefits of higher commodity-based gathering and processing rates and greater Haynesville gathering volumes and favorable commodity margins.
Northeast G&P: Engaged in natural gas gathering and processing, along with the NGL fractionation business in the Marcellus and Utica shale regions, the segment generated adjusted EBITDA of $418 million, up almost 4% from the prior-year quarter’s $402 million. This uptick could be attributed to higher service revenues, primarily related to the gathering rate escalations in various systems in the Northeast.
Gas & NGL Marketing Services: This unit generated adjusted EBITDA of $65 million, down 30% from the prior-year quarter’s $93 million. This downside reflects a $57-million net unrealized loss in commodity derivatives, excluded from Adjusted EBITDA. Both measures were also impacted by the absence of a $58-million favorable impact of the Winter Storm Uri in 2021, which was offset by higher commodity margins and administrative costs associated with the Sequent business acquired in July 2021.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses remained almost the same as the year-ago quarter’s figure of $1.87 billion.
Williams’ total capital expenditure was $316 million in the first quarter, up from $277 million a year ago. As of Mar 31, 2022, the company had cash and cash equivalents of $604 million and a long-term debt of $20.8 billion, with a debt-to-capitalization of 59.8%.
2022 Guidance
WMB raised its full-year adjusted EBITDA guidance to the $5.9-$6.2 billion band from the earlier $5.6-$6 billion range, with growth capital spending in the range of $2.25 billion-$2.35 billion. Further, Williams expects to achieve a leverage ratio midpoint of 3.8, which, along with expectations to generate a positive free cash flow after dividends and capital expenditures (excluding the Trace acquisition of approximately $950 million), offers financial flexibility. The dividend guidance increased 3.7% on an annualized basis to $1.70 in 2022 from $1.64 in 2021.
The company anticipates maintenance capital expenditures between $650 million and $750 million, including the capital for emissions reduction and modernization initiatives.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 7.45% due to these changes.
VGM Scores
At this time, Williams Companies, Inc. The has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Williams Companies, Inc. The has a Zacks Rank #2 (Buy). We expect an above average 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, Kinder Morgan (KMI - Free Report) , has gained 5.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Kinder Morgan reported revenues of $4.29 billion in the last reported quarter, representing a year-over-year change of -17.6%. EPS of $0.32 for the same period compares with $0.60 a year ago.
For the current quarter, Kinder Morgan is expected to post earnings of $0.26 per share, indicating a change of +13% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.5% over the last 30 days.
Kinder Morgan has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.