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Why Is Williams Partners (WPZ) Up 9.1% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for Williams Partners L.P. . Shares have added about 9.1% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is WPZ 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.

First-Quarter 2018 Resullts

Williams Partners L.P. reported first-quarter 2018 earnings of 37 cents per limited partner unit, which missed the Zacks Consensus Estimate of 41 cents. The figure also fell from earnings of 68 cents per limited partner unit in the prior-year quarter. The decline was mainly caused by the absence of revenues from the sale of the Geismar olefins facility.
 
Quarterly total revenues rose 5% year over year to $2,083 million from $1,983 million. The upside can be attributed to higher-fee based revenues from commissioning of Transco expansions as well as lower operating and maintenance expense. However, the top line came below the Zacks Consensus Estimate of $2,121 million.

Williams Partners' distributable cash flow (DCF) attributable to partnership operations in the reported quarter was $784 million, up from $752 million in the year-ago quarter.

Recently, the partnership announced a regular quarterly cash distribution of 61.4 cents per unit, up 2.33% sequentially.

Segment Performance

Consolidated adjusted segment profit was $1,122.0 million, up 0.5% from the year-ago quarter’s level of $1,117.0 million.

Northeast G&P: The segment reported profits of $250 million, up from $227 million in first-quarter 2017. The improvement was primarily driven by higher-fee revenues from the Susquehanna Supply Hub and Ohio River Supply Hub. Additionally, the partnership's increase in ownership in two Marcellus shale gathering systems in first-quarter 2017 along with higher volumes gathered by those systems also contributed to the growth. The profits, however, lagged the Zacks Consensus Estimate of $255 million.

Atlantic-Gulf: The segment reported profits of $466 million compared with $453 million in the year-ago quarter and the Zacks Consensus Estimate of $455 million. This was primarily due to higher revenues from commissioning of Transco expansion projects.

West: Segmental profit was $406 million against $389 million in the year-ago quarter and improving from the Zacks Consensus Estimate of $403 million. The increase can be attributed to increased fee revenues from higher volumes.

NGL & Petchem Services: The segment reported profits of $49 million, in the year-earlier quarter.

Following the sale of the Geismar olefins facility on Jul 6, 2017, this segment no longer contained any operating assets as of Jul 7, 2017.

Operating & Maintenance Expense

The partnership reported operating and maintenance expense of $351 million, down nearly 3% from the year-ago quarter’s level.  

Guidance

For 2018, the partnership expects growth capital spending at $2.7 billion. The 2018 capital expenditure for the Transco growth project has been estimated at $1.7 billion.

The partnership projected distributable cash flow for 2018 between $2.9 billion and $3.2 billion.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There have been three revisions higher for the current quarter compared to three lower. In the past month, the consensus estimate has shifted by 8.9% due to these changes.

Williams Partners L.P. Price and Consensus

VGM Scores

At this time, WPZ has a poor Growth Score of F, however its Momentum is doing a lot 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

WPZ has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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