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Williams Companies, Inc. The (WMB) Up 10.1% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Williams Companies, Inc. The (WMB). Shares have added about 10.1% 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 its most recent earnings report in order to get a better handle on the important drivers.

Williams Reports In-Line Q3 Earnings

The Williams Companies reported third-quarter 2020 adjusted earnings per share of 27 cents, meeting 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 bottom line improved 3.85% from the year-earlier quarter's adjusted earnings of 26 cents.

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

Key Takeaways

Distributable cash flows came in at $772 million, down 6.1% from the year-ago number of $822 million. Adjusted EBITDA was $1.26 billion in the quarter under review, marginally lower than the year-ago quarter’s figure of $1.27 billion. Cash flow from operations totaled $452 million compared with $858 million in the prior-year period.

Segmental Analysis

Transmission & Gulf of Mexico: Consisting of Williams’ Transco Pipeline and assets in the Gulf Coast area, the segment generated adjusted EBITDA of $622 million, down 8.5% from $680 million in the year-ago quarter. This underperformance was caused by depressed service revenues from lower non-cash deferred revenue amortization at Gulfstar One. Apart from declining revenues, a number of temporary production shut-ins induced by hurricane hampered segment profitability.

West: This segment includes the Northwest pipeline and operations in various regions, such as Colorado, Mid-Continent and Haynesville Shale among others. It delivered adjusted EBITDA of $245 million, marginally higher than the year-earlier figure of $244 million. Soft revenues in Barnett Shale affected the result, which was partially offset by minimized 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 adjusted EBITDA of $396 million, up 15.5% from the prior-year quarter’s $343 million, led by record gathering and processing volumes. Expanded volumes from the new Northeast JV along with added ownership in Utica East Ohio Midstream also boosted results. Moreover, cost-minimizing efforts aided segmental profitability.

Costs, Capex & Balance Sheet

In the reported quarter, total costs and expenses decreased to $1.29 billion from $1.37 billion a year ago owing to fall in product expenses and G&A costs.

Williams’ total capital expenditure was $938 million in the third quarter, down substantially from $1.7 billion a year ago.

As of Sep 30, 2020, the company had cash and cash equivalents worth $70 million and a long-term debt of $21.95 billion with a debt-to-capitalization of 64.5%.

2020 Guidance

The company anticipates full-year adjusted EBITDA in the lower end of its earlier guided range of $4.95-$5.25 billion. Growth capex view for the year is expected in the $1-$1.2 billion band, lower than the earlier-issued $1.1-$1.3 billion range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 6.3% due to these changes.

VGM Scores

Currently, Williams Companies, Inc. The has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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.


Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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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