Zacks Investment Research downgraded North American energy
Williams Companies Inc.
) to Zacks Rank #5 (Strong Sell) on Mar 6.
ENERPLUS CORP (ERF): Free Stock Analysis
NGL ENERGY PART (NGL): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
WILLIAMS COS (WMB): Free Stock Analysis
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Why the Downgrade?
Williams witnessed sharp downward estimate revisions after
reporting disappointing fourth-quarter 2012 results. In fact,
Williams delivered negative earnings surprises in the third and
fourth quarters with a miss of 7.41% and 3.85%, respectively.
On Feb 20, 2013, Williams registered fourth-quarter 2012 earnings
per share (excluding special items) of 25 cents, missing the
Zacks Consensus Estimate of 26 cents. Earnings per share also
deteriorated 30.6% from the year-ago adjusted profit level of 36
Lower natural gas liquid (NGL) margins and higher development
cost related to an earlier acquisition were responsible for the
fall in earnings.
Among the company's segments, Williams Partners adjusted
operating profit was $449.0 million, down approximately 17.2%
from the year-ago level of $542.0 million. Moreover, Williams NGL
& Petchem Services segments' quarterly adjusted operating
profit decreased 22.9% year over year to $27.0
The expected bearish natural gas fundamentals over the next few
quarters and excessive domestic gas supplies have made investors
cautious toward the stock. As a result, the Zacks Consensus
Estimate for the first quarter of 2013 decreased 10.7% to 25
cents per share over the last 30 days. For 2013, most of the
estimates (8 out of 10) were revised downward over the last 30
days, lowering the Zacks Consensus Estimate by 14.5% to $1.00 per
Other Stocks to Consider
Not all energy stocks are performing as poorly as Williams. The
Range Resources Corp.
NGL Energy Partners LP
) are worth considering. All three carry a Zacks Rank #1 (Strong
Buy) signifying that these stocks will outperform the broader
U.S. equity market over the next 1 to 3 months.