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Why Is Williams Companies, Inc. The (WMB) Up 7.1% Since Last Earnings Report?

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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 7.1% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.

Williams Q1 Earnings Beat, Up Y/Y

Williams Companies reported first-quarter 2020 adjusted earnings per share of 26 cents, beating the Zacks Consensus Estimate by a penny, attributable to a strong contribution from this energy infrastructure provider’s Transmission & Gulf of Mexico and Northeast G&P units. Moreover, the bottom line improved from the year-earlier quarter's adjusted earnings of 22 cents.

However, quarterly revenues of $1.91 billion missed the Zacks Consensus Estimate by 11.49% and also decreased from the year-ago figure of $2.05 billion due to weak performance at the West segment.

Key Takeaways

Distributable cash flows came in at $861 million, up 10.4% from the year-ago number of $780 million. Adjusted EBITDA was $1.3 billion in the quarter under review compared with $1.2 billion in the corresponding period of 2019. Cash flow from operations totaled $787 million compared with $775 million in the prior-year period. Improved adjusted EBITDA and lower maintenance capital drove cash flow in the quarter.

Segmental Analysis

Transmission & Gulf of Mexico: Consisting Williams’ Transco Pipeline and assets in the Gulf Coast area, the segment generated adjusted EBITDA of $669 million, up 5.2% from $639 million in the year-ago quarter. This outperformance was led by service revenue gains from the expansion projects around Transco (the country's largest gas transmission system and Williams’ core initiative), which came online over the past few years. Apart from reaping revenues, benefits of a positive resolution of Transco’s settled general rate case favored segment profitability.

West: This segment includes the Northwest pipeline and operations in various regions, such as Colorado, Mid-Continent and Haynesville Shale among others. It delivered adjusted EBITDA of $216 million, 20% lower than the year-earlier recorded figure of $270 million. Soft revenues in Barnett Shale together with declined NGL prices impacted the results.

Northeast G&P: Engaged in natural gas gathering and processing along with the NGL fractionation business in Marcellus and Utica shale regions, the segment generated adjusted EBITDA of $370 million, up 22.5% from the prior-year quarter’s $302 million. Expanded volumes from the new Northeast JV, Susquehanna Supply Hub and higher service revenues from Ohio Valley and the Utica Shale regions, along with added ownership in Utica East Ohio Midstream drove the results.

Costs, Capex & Balance Sheet

In the reported quarter, total costs and expenses decreased marginally to $1.48 billion from $1.49 billion a year ago owing to fall in product expenses and G&A costs.

Williams’ total capital expenditure was $306 million in the first quarter, down substantially from $422 million a year ago. As of Mar 31, 2020, the company had cash and cash equivalents worth $400 million and a long-term debt of $21.8 billion with a debt-to-capitalization of 63.9%.

2020 Guidance

The company anticipates its full-year adjusted EBITDA in the lower end of its previously provided guided range of $4.95-$5.25 billion. Growth and maintenance capex view for the year is expected in the lower end of the earlier-issued $1.55-$1.85 billion guided range.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, Williams Companies, Inc. The has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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

Williams Companies, Inc. The has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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