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Williams (WMB) Beats Earnings and Revenue Estimates in Q2

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Williams Companies, Inc. (WMB - Free Report) reported second-quarter 2018 adjusted earnings from continuing operations of 17 cents per share, marginally outpacing the Zacks Consensus Estimate of 16 cents. The better-than-expected results can be attributed to increase in service revenues and NGL margins. Further, the bottom line improved from the prior-year figure of 13 cents per share.

For the quarter ended Jun 30, 2018, Williams Companies reported revenues of $2,091 million, beating the Zacks Consensus Estimate of $2,000 million. Further, revenues also increased from the year-ago figure of $1,924 million.

Segmental Analysis

Williams Partners L.P.: This segment reported adjusted operating profit of $1,097 million, slightly lower than $1,104 million recorded in the year-ago quarter. Lower earnings at Discovery Producer Services and sale of the Geismar olefins facility impacted the results.

Other: The segment posted adjusted operating profit of $13 million, higher than the prior-year quarter’s $9 million.

Expenses Summary

Total cost and expenses increased 8.7% to $1,681 million in the reported quarter compared with $1,546 million in the prior-year quarter. The increased costs were primarily driven by higher product costs, impairment charges and processing commodity expenses.

Capital Expenditure & Balance Sheet

During the reported quarter, Williams Companies’ capital expenditure was $933 million. As of Jun 30, 2018, the company had cash and cash equivalents of $275 million. Long-term debt of the company was $21,313 million, representing a debt-to-capitalization ratio of 69.5%.

Outlook

The company has updated its guidance for 2018 and 2019. Williams Companies now expects its adjusted EBITDA for 2018 within $4,450-$4,650 million. The company expects distributable cash flow in the range of $2,600-$2,900 million. The coverage ratio is expected between 1.52x and 1.70x in 2018. The growth capex is now anticipated at $3.9 billion versus prior guidance of $2.6 billion.

For 2019, Williams Companies anticipates its adjusted EBITDA in the band of $4,850-$5,150 million, with distributable cash flow within $2,900-$3.300 million. The coverage ratio is expected to be around 1.68x. Growth capex for 2019 is expected at $2.6 billion versus prior guidance of $2.4 billion.

Zacks Rank and Key Picks

Williams Companies currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are China Petroleum and Chemical Corporation (SNP - Free Report) , also known as Sinopec, PetroChina Company Limited (PTR - Free Report) , and Bonanza Creek Energy, Inc. (BCEI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sinopec delivered an average positive earnings surprise of 492.8% in the trailing four quarters.

PetroChina delivered an average positive earnings surprise of 21.99% in the trailing four quarters.

Bonanza Creek surpassed earnings estimates in each of the trailing four quarters, with an average positive earnings surprise of 215.16%

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