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Why Is Williams Companies, Inc. The (WMB) Up 9.4% 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 9.4% 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 and Revenues Top Estimates

Williams reported first-quarter 2021 adjusted earnings per share (EPS) of 35 cents, beating the Zacks Consensus Estimate of 28 cents as well as the year-ago quarter’s earnings of 26 cents.

This outperformance can be attributed to higher-than-expected contributions from its two segments. Precisely, adjusted EBITDA from the West and the Northeast G&P units totaled $315 million and $402 million each, ahead of their respective Zacks Consensus Estimate of $247 million and $397 million.

Also, for the quarter ended Mar 31, the company’s revenues of $2.61 billion beat the Zacks Consensus Estimate by 22.71% and also increased from the year-ago figure of $1.9 billion.

Takeaways

Adjusted EBITDA was $1.4 billion in the quarter under review, reflecting an increase of 12.1% from the corresponding period of 2020. Cash flow from operations totaled $915 million compared with $787 million in the prior-year period. Favorable net working capital changes drove cash flow in the quarter.

Segmental Analysis

Transmission & Gulf of Mexico: Comprising Williams’ massive Transco pipeline system and the Northwest Pipeline, the segment generated adjusted EBITDA of $660 million, lower than the year-ago quarter’s $669 million. Despite marginal gains in service revenues, commodity margins and investee EBITDA, the unit’s performance was offset by higher operating and administrative expenses.

West: This segment includes gathering and processing assets in the Western region of the United States. It delivered adjusted EBITDA of $315 million, which is 45.8% higher than $216 million recorded in the year-earlier quarter. The improved results were driven by higher product marketing margins resulting from elevated prices and the absence of prior-year inventory effects plus lower operating and administrative expenses.

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 an adjusted EBITDA of $402 million, up 8.7% from the prior-year quarter’s $370 million. Increased gathering volumes on its Bradford and Marcellus South systems and higher equity-method investments contributions drove the results.

Costs, Capex & Balance Sheet

In the reported quarter, total costs and expenses increased 26.4% to $1.9 billion from $1.5 billion a year ago, primarily due to higher product expenses.

Williams’ total capital expenditure was $277 million in the first quarter, down from $284 million a year ago. As of Mar 31, 2021, the company had cash and cash equivalents of $1.13 billion and a long-term debt of $21.1 billion with a debt-to-capitalization of 64.3%.

2021 Guidance

The company updated full-year adjusted EBITDA to the band of $5.2-$5.4 billion from the prior guided range of $5.05-$5.35 million. It reiterates its growth capital spending in the band of $1-$1.2 billion. It expects to generate positive free cash flow, which will allow it to maintain financial stability.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

Currently, Williams Companies, Inc. The has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Williams Companies, Inc. The has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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