It has been about a month since the last earnings report for Williams Companies, Inc. (The) (WMB). Shares have added about 0% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Williams Q1 Earnings & Revenues Outpace Estimates
The Williams Companies reported first-quarter 2023 adjusted earnings of 56 cents per share, which beat the Zacks Consensus Estimate of 46 cents. The bottom line also outdid the year-ago period’s reported figure of 41 cents. The outperformance was due to higher-than-expected contributions from one major segment — Northeast G&P. Adjusted EBITDA from the segment totaled $470 million, which outpaced the Zacks Consensus Estimate of $453 million. The figure also increased 12.4% on a year-over-year basis.
Williams’ revenues of $3.1 billion in the reported quarter beat the Zacks Consensus Estimate of $2.8 billion. The top line also outperformed the year-ago quarter’s figure of $2.5 billion, which could be attributed to increased revenues from service.
Adjusted EBITDA was $1.79 billion in the quarter under review, an increase of 18.5% from the prior-year period. Cash flow from operations totaled $1.51 billion, up 39.8% from that recorded in the corresponding quarter of 2022.
Transmission & Gulf of Mexico: The segment reported adjusted EBITDA of $728 million, up 4.4% from the year-ago quarter. This was largely driven by much higher service revenues from Transco’s recent in-service Leidy South expansion project.
West: This segment registered an adjusted EBITDA of $286 million, 10% higher than $260 million recorded in the year-earlier quarter. The improvement resulted from contributions from Trace Midstream and the benefits of realized gains on natural gas hedges.
Northeast G&P: Adjusted EBITDA for this segment was $470 million, up 12.4% from the prior-year quarter’s $418 million. This uptick can be attributed to higher volumes at Ohio Valley Midstream, Marcellus South and Cardinal.
Gas & NGL Marketing Services: This unit generated an adjusted EBITDA of 231 million compared with $65 million in the year-ago quarter. The upside reflects higher commodity marketing margins and a $390-million net favorable change in unrealized gains/losses on commodity derivatives.
Costs, Capex & Balance Sheet
Total costs and expenses amounted to $1.72 billion in the reported quarter.
Total capital expenditure was $525 million compared with $316 million a year ago. As of Mar 31, 2023, the company had cash and cash equivalents of $477 million, and a long-term debt of $22.79 billion, with a debt-to-capitalization of 61.4%.
WMB expects its full-year adjusted EBITDA to be $6.4-$6.8 billion. Growth capital spending is anticipated to be $1.6-$1.9 billion. Williams expects to achieve a leverage ratio mid-point of 3.65. This, along with the scope of generating a positive free cash flow after dividends and capital expenditure (excluding the Trace acquisition of approximately $950 million), offers financial flexibility. The dividend guidance for 2023 increased 5.3% on an annualized basis to $1.79 from $1.70 in 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
At this time, Williams Companies, Inc. (The) has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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.
Performance of an Industry Player
Williams Companies, Inc. (The) belongs to the Zacks Oil and Gas - Production and Pipelines industry. Another stock from the same industry, Cheniere Energy Partners, LP (CQP), has gained 0.5% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Cheniere Energy Partners, LP reported revenues of $2.92 billion in the last reported quarter, representing a year-over-year change of -12.4%. EPS of $1.43 for the same period compares with $0.73 a year ago.
Cheniere Energy Partners, LP is expected to post earnings of $0.60 per share for the current quarter, representing a year-over-year change of +140%. Over the last 30 days, the Zacks Consensus Estimate has changed +13.8%.
Cheniere Energy Partners, LP has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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