On Jun 11, Zacks Investment Research downgraded Tulsa,
Williams Companies Inc.
) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Williams witnessed sharp downward estimate revisions after
reporting disappointing first-quarter 2013 results. In fact, this
leading North American energy firm delivered negative earnings
surprises in 3 of the last 4 quarters with an average miss of
On May 7, 2013, Williams reported weak first-quarter 2013
results, hamstrung by a significant fall in natural gas liquid
(NGL) margins. Earnings per share - excluding special items -
came in at 22 cents, below the Zacks Consensus Estimate of 24
cents and also down from the year-ago adjusted profit of 39
Notably, Williams' high debt level is a cause of concern. It
leaves the company vulnerable to an extended drop in commodity
prices. As of Mar 31, 2013, Williams had long-term debt of more
than $10.6 billion, representing a debt-to-capitalization ratio
Moreover, we believe that the transfer of the upstream assets
(post-split) has left Williams with a less diversified business.
As a result, the business risk profile of the reorganized
Williams is weaker than it was prior to the spin-off.
A combination of all these factors has weighed on the earnings
estimates for Williams in the last 60 days. The Zacks Consensus
Estimate for the second quarter of 2013 has gone down by 19.0% to
17 cents per share while it dropped 19.4% to 79 cents per share
Other Stocks to Consider
Not all energy production/pipeline entities are performing as
poorly as Williams. The stocks of
EQT Midstream Partners LP
Oiltanking Partners LP
Atlas Energy LP
) are worth considering. All these stocks carry a Zacks Rank #1
ATLAS ENERGY LP (ATLS): Free Stock Analysis
EQT MIDSTRM PTR (EQM): Free Stock Analysis
OILTANKING PTNR (OILT): Free Stock Analysis
WILLIAMS COS (WMB): Free Stock Analysis
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