Will Williams Companies (WMB) Disappoint on Earnings? - Analyst Blog

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North American energy firm, Williams Companies Inc. ( WMB ) is set to report first-quarter 2014 results after the closing bell on Apr 30. Let's see how things are shaping up prior to this announcement.

Factors to Consider this Quarter

Williams Companies is a premier energy infrastructure provider in North America. In the last reported quarter, it managed to beat the Zacks Consensus Estimate by just a penny. However, earnings declined 12% year over year due to reduced natural gas liquid (NGL) margins, plant shut down activities and increased operating and maintenance expenses. Revenues were also affected as a result of lower product sales in the Williams Partners business unit.


Though commodity prices remained strong during the past few months thanks to the frigid winter, other factors that impacted the fourth quarter results, if continued, could hamper the upcoming results.

The company's fundamentals do not look too good as well.  Williams Companies has a high debt-to-capitalization ratio of 70.4% (As of Dec 31, 2013). Moreover, its price to earnings ratio as well as price to sales ratio is substantially higher than its peer group average. These factors make the company more vulnerable than its peers.

Earnings Whispers

Accordingly, our proven model does not conclusively show that Williams Companies is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here.

Negative Zacks ESP: This is because the Most Accurate estimate stands at 26 cents per share while the Zacks Consensus Estimate is 27 cents, resulting in a -3.70% ESP.

Zacks Rank #3 (Hold): Williams Companies' Zacks Rank #3 when combined with a negative ESP lowers the predictive power and makes surprise prediction difficult.

We caution against stocks with Zacks #4 and 5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Callon Petroleum Company ( CPE ), earnings ESP of +25.00% and Zacks Rank #2 (Buy). The company is slated to release first quarter earnings on May 8.

Canadian Natural Resources Limited ( CNQ ), earnings ESP of +8.22% and Zacks Rank #2. The company is expected to release earnings after the closing bell on May 8.

Abraxas Petroleum Corp. ( AXAS ), earnings ESP of +20.00% and Zacks Rank #2. The company is scheduled to release earnings on May 8.



ABRAXAS PETE/NV (AXAS): Free Stock Analysis Report

CDN NTRL RSRCS (CNQ): Free Stock Analysis Report

CALLON PETE-DEL (CPE): Free Stock Analysis Report

WILLIAMS COS (WMB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: NGL , AXAS , CNQ , CPE , WMB

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