Williams Companies, Inc. (WMB) Down 1.7% Since Last Earnings Report: Can It Rebound?

It has been approximately one month since Williams Companies, Inc. last reported earnings. The (WMB). Shares have lost about 1.7% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or will Williams Companies, Inc. waiting for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

Williams Q2 Earnings Estimates, YoY Growth

Williams reported second-quarter 2021 adjusted earnings per share (EPS) of 27 cents, which was in line with the Zacks Consensus Estimate. Reported earnings were higher than a year ago, when earnings per share were 25 cents.

The recent financial result can be attributed to higher-than-expected contributions from both segments. Adjusted EBITDA for G&P’s West and Northeast units was $231 million and $409 million each, topping their Zacks Consensus Estimates of $228 million and $402 million.

However, the results were partially offset by lower-than-expected contributions from the Transmission and Gulf of Mexico segments. Segment adjusted EBITDA was $648 million, missing the Zacks Consensus Estimate of $669 million.

The company’s revenues of $2.28 billion for the quarter ended June 30 missed the Zacks Consensus Estimate by 9.87%. However, the same figure is up from the figure of $1.78 billion a year ago.

To go

Adjusted EBITDA for the quarter was $1.432 billion, reflecting an increase of 6% compared to the same period in 2020. Cash flow from operations was $1.06 billion, compared to $1.14 billion in the prior-year period.

Segment analysis

Broadcast and Gulf of Mexico: The segment, which includes Williams’ massive Transco pipeline system and Northwest Pipeline, generated adjusted EBITDA of $648 million, up from $617 million in the year-ago quarter. Results were driven by increases in service revenues, strong commodity margins and higher natural gas transmission service revenues related to recent expansion projects.

West: This segment covers the gathering and processing of assets in the Western region of the United States. It achieved adjusted EBITDA of $231 million, down 8.33% from the $252 million reported in the prior-year quarter. Results were impacted by reduced service revenues, which indicated reduced harvest volumes, lower amortization of Barnett’s deferred revenues and the absence of a shortfall fee.

Northeastern Goods and Services: The natural gas extraction, processing and NGL fractionation segment in the Marcellus and Utica shale regions generated adjusted EBITDA of $409 million, up 12.7% from $363 million in the prior-year quarter. Increased data collection volumes in the Bradford and Marcellus South systems and higher equity investment contributions improved results.

Costs, capital expenditure and balance sheet

In the reported quarter, total costs and expenses increased 44% to $1.68 billion from $1.17 billion a year earlier, primarily due to higher product spending, operating and maintenance costs, and depreciation costs.

Williams’ total capital expenditures in the second quarter were $460 million, up from $363 million a year ago. As of June 30, 2021, the company had cash and cash equivalents of $1.2 billion and long-term debt of $21.1 billion with a debt-to-capitalization ratio of 64.7%.

2021 Guidelines

The company forecasts full-year adjusted EBITDA to be at the high end of its previously established range of $5.2 billion to $5.4 billion. It maintains its development capital spending in the range of $1 billion to $1.2 billion. It expects to generate positive free cash flow, which will help maintain financial stability.

How have estimates changed since then?

Investors have witnessed a downward trend in estimate revisions over the last month.

VGM results

Currently, Williams Companies, Inc. it has a solid Growth Score of B, although it lags well behind its Momentum Score of F. However, the stock is rated a B for Value, putting it in the second quintile for this investment strategy.

Overall, the stock has a composite VGM score of B. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company are generally on a downward trend, and the magnitude of these revisions indicates a downward shift. It’s no surprise that Williams Companies, Inc. It has a Zacks Rank of 4 (Sell). We expect a below-average rate of return on stocks in the coming months.

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