It has been about a month since the last earnings report for Williams Companies, Inc. The (WMB). Shares have added about 2.6% in that time frame.
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 Q3 Earnings Beat Estimate
The Williams Companies reported third-quarter 2022 adjusted earnings per share of 48 cents, beating the Zacks Consensus Estimate of 44 cents and surpassing the year-earlier period’s profit of 34 cents per share. The outperformance was due to higher-than-expected contributions from a couple of segments.
Adjusted EBITDA from the Others segment totaled $127 million, ahead of the Zacks Consensus Estimate of $117 million. Adjusted EBITDA of $337 million from the West unit beat the Zacks Consensus Estimate of $314 million.
Meanwhile, in the quarter ended Sep 30, Williams’ revenues of $3.02 billion outperformed the Zacks Consensus Estimate of $2.87 billion and also beat last year’s third-quarter revenues of $2.47 billion. The outperformance could be attributed to increased product sales.
Adjusted EBITDA was $1.64 billion in the quarter under review, reflecting an increase of 15.3% from the corresponding period of 2021. Cash flow from operations totaled $1.49 billion, up 78.7% from the prior-year period.
Transmission & Gulf of Mexico: Comprising WMB’s massive Transco pipeline system and Northwest Pipeline, the segment generated adjusted EBITDA of $671 million, rising 6.5% from the year-ago quarter.
This unit’s performance was largely driven by higher service revenues from Transco’s Leidy South expansion project and reduced hurricane impacts on the Gulf Coast region.
West: This segment focuses on the gathering and processing of assets in the Western region of the United States. It delivered an adjusted EBITDA of $337 million, 31.1% higher than the $257 million recorded in the year-earlier quarter.
The improvement in results was primarily due to higher commodity-based rates and higher Haynesville gathering volumes, including contributions from Trace Midstream acquired in April.
Northeast G&P: The segment is engaged in natural gas gathering and processing, along with the NGL fractionation business in the Marcellus and Utica shale regions.
The unit generated adjusted EBITDA of $464 million, up almost 5% from the prior-year quarter’s $442 million. This uptick was driven by higher service revenues from Ohio Valley Midstream.
Gas & NGL Marketing Services: This unit generated adjusted EBITDA of $38 million, up 11.8% from the prior-year quarter’s $34 million. The result of this segment benefited from stable commodity margins, which included the write-downs of inventory to lower period-end market prices.
Costs, Capex & Balance Sheet
In the reported quarter, total costs and expenses of $2.2 billion rose by almost 3.8% compared with the year-ago quarter’s figure of $2.12 billion.
Williams’ total capital investment was $950 million in the third quarter, up from $469 million a year ago. As of Sep 30, 2022, the company had cash and cash equivalents of $859 million and long-term debt of $22.5 billion, with a debt-to-capitalization of almost 61.8%.
WMB maintained its 2022 adjusted EBITDA in the range of $6.1 billion-$6.4 billion, with growth capital spending anticipated in the range of $1.25 billion-$1.35 billion. Further, Williams expects to achieve a leverage ratio midpoint of 3.6, lower than the original guidance of 3.8.
Moreover, the company reaffirmed its maintenance capital expenditures between $650 million and $750 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
At this time, Williams Companies, Inc. The has a nice Growth Score of B, though it is lagging a bit 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.
Williams Companies, Inc. The has a Zacks Rank #2 (Buy). We expect an above average 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, Kinder Morgan (KMI), has gained 3.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Kinder Morgan reported revenues of $5.18 billion in the last reported quarter, representing a year-over-year change of +35.4%. EPS of $0.25 for the same period compares with $0.22 a year ago.
For the current quarter, Kinder Morgan is expected to post earnings of $0.30 per share, indicating a change of +11.1% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Kinder Morgan. Also, the stock has a VGM Score of C.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report