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Williams (WMB) Likely to Beat on Q2 Earnings: Here's Why

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The Williams Companies, Inc. (WMB - Free Report) is set to release second-quarter 2021 results after the closing bell on Aug 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 27 cents per share on revenues of $2.35 billion.

Let’s delve into the factors that might have influenced the company’s performance in the June quarter. But it’s worth taking a look at Williams’ previous-quarter performance first.

Highlights of Q1 Earnings & Surprise History

In the last-reported quarter, the energy infrastructure provider beat the consensus mark owing 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. Williams had reported adjusted earnings per share of 35 cents, ahead of the Zacks Consensus Estimate by 7 cents. Revenues of $2.6 billion generated by the firm had also come in above the Zacks Consensus Estimate of $2.1 billion.

Williams beat the Zacks Consensus Estimate in two of the last four quarters, missed in one and met in the other, delivering an earnings surprise of 7.65%, on average. This is depicted in the graph below:
 

Williams Companies, Inc. The Price and EPS Surprise

Williams Companies, Inc. The Price and EPS Surprise

Williams Companies, Inc. The price-eps-surprise | Williams Companies, Inc. The Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the second-quarter bottom line remained the same in the last seven days. The estimated figure indicates an 8% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 32% increase from the year-ago period.

Factors to Consider

Adjusted EBITDA from the Transmission & Gulf of Mexico segment — which includes Williams’ crown jewel and the nation’s largest and fastest growing natural gas pipeline system Transco — was $660 million in the first quarter. This reflected an improvement from the previous quarter’s income of $644 million. The uptick is most likely to have continued in the second quarter, thanks to the expansion projects around Transco being placed into service over the past few years and the additional volumes from these takeaway infrastructures on the back of strong drilling activity.

Meanwhile, the West unit — which includes gathering and processing assets in the Western region of the United States — delivered adjusted EBITDA of $315 million in the March quarter, up 13.7% sequentially. The segment is expected to have continued its good performance in the to-be-reported quarter on the back of higher margins from natural gas liquids marketing activities. 

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Williams this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

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

Williams has an Earnings ESP of +2.19% and a Zacks Rank #3.

Other Stocks to Consider

Williams is not the only energy company looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:

APA Corporation (APA - Free Report) has an Earnings ESP of +7.02% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 4.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Resources, Inc. has an Earnings ESP of +4.62% and is Zacks #1 Ranked. The firm is scheduled to release earnings on Aug 2.

Devon Energy Corporation (DVN - Free Report) has an Earnings ESP of +0.19% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 3.

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