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How is Williams Companies (WMB) Placed Ahead of Q4 Earnings?

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The Williams Companies, Inc. (WMB - Free Report) is set to release fourth-quarter 2020 results on Monday Feb 22, after the closing bell.

The Zacks Consensus Estimate for the to-be-reported quarter’s profit is 32 cents per share and for revenues is $1.95 billion.

Against this backdrop, let’s consider the factors that are likely to impact the company’s December-quarter results.

Factors to Consider for Q4 Results

Williams’ Transmission & Gulf of Mexico segment consisting of its Transco Pipeline and assets in the Gulf Coast area is likely to have performed well in the fourth quarter. Notably, the Zacks Consensus Estimate for the unit’s fourth-quarter adjusted EBITDA is pegged at $641 million, indicating a 3.1% rise from the prior quarter’s reported figure of $622 million.  

The company’s WestunitcomprisingNorthwest pipeline and operations in various regions including Colorado, Mid-Continent and Haynesville Shale among others generated an adjusted EBITDA of $245 million in the third quarter, almost unchanged from the year-ago quarter’s reported figure of $244 million. Soft revenues in Barnett Shale affected the result, which was offset by minimized operating and administrative expenses, a trend that most likely continued in the fourth quarter too. The Zacks Consensus Estimate for the unit’s fourth-quarter adjusted EBITDA is pegged at $245 million, suggesting no change from the previous quarter’s reported number.

What Does Our Model Say?

Our proven Zacks model does not conclusively predict an earnings beat for Williams this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Williams has an Earnings ESP of -19.17%.

Zacks Rank: Williams carries a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Highlights of Q3 Earnings & Surprise History

In the last reported quarter, this Tulsa, OK-based energy player’s adjusted earnings per share of 27 cents met the Zacks Consensus Estimate, attributable to a strong contribution from the Northeast G&P unit. The bottom line was, however, partially offset by weak results from the Transmission & Gulf of Mexico segment. Nonetheless, the metric improved 3.85% from the year-earlier quarter's adjusted earnings of 26 cents.

Further, this energy infrastructure provider’s quarterly revenues of $1.93 billion outpaced the Zacks Consensus Estimate by 9.40% but the same decreased from the year-ago figure of $2 billion.

As far as earnings surprises are concerned, this midstream player shows a mixed record with its bottom line having topped the Zacks Consensus Estimate twice in the last four quarterly reports, lagging the same just once while meeting the mark on the remaining occasion. The average surprise is 2.18%. This is depicted in the graph below:

Stocks to Consider

While earnings outperformance looks uncertain for Williams this season, here are some firms worth considering from the energy space, which according to our model have the perfect combination of ingredients to deliver a positive surprise this reporting cycle:

PDC Energy, Inc. (PDCE - Free Report) has an Earnings ESP of +10.77% and is a #1 Ranked stock, currently. The firm is scheduled to release earnings on Feb 24.

Ovintiv Inc. (OVV - Free Report) has an Earnings ESP of +0.66% and is Zacks #1 Ranked, currently. The company is scheduled to release earnings on Feb 17.

Cheniere Energy, Inc. (LNG - Free Report) has an Earnings ESP of +9.03% and a Zacks Rank #3, currently. The company is scheduled to release earnings on Feb 24.

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