A month has gone by since the last earnings report for Williams Companies, Inc. (WMB). Shares have lost about 4.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Williams Companies, Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Williams Companies Posts Stronger Year-Over-Year Results
Williams Companies 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.
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.
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%.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, Williams Companies, Inc. has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Williams Companies, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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