Williams Q3 Earnings: Is NYSE:WMB Expensive at 162.9x Price/EPS?

in EARNINGS/INVESTING IDEAS by

The Williams Companies, Inc. (NYSE:WMB) is scheduled to report Q3 earnings results after markets close for trading on November 2, 2020.

The company is expected to report earnings of $0.26/share on revenue of $1.746 billion. The consensus earnings per share (EPS) of $0.26/share is based on a poll of 7 analysts and represents a growth in eps of 1.9% over the same quarter last year, when the company reported earnings of $0.26/share.

The revenue forecast of $1.746 billion based on a poll of 9 analysts implies a year-over-year (YoY) decline in revenue of −12.7%. Last year the company reported $1.999 billion in revenue for the quarter.

Expected to report EPS growth of 1.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,746.03 $1,999.00 −12.7%
EPS $0.26 $0.26 1.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

What are your expectations from The Williams Companies, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.24 $0.25 2.8% Beat
Q1, 2020 $0.26 $0.26 0.4% Beat
Q4, 2019 $0.25 $0.24 −4.6% Missed
Q3, 2019 $0.25 $0.26 4.9% Beat
Q2, 2019 $0.23 $0.26 13.7% Beat
Q1, 2019 $0.22 $0.22 −0.6% Missed
Q4, 2018 $0.25 $0.19 −22.7% Missed
Q3, 2018 $0.20 $0.24 19.3% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 11.6%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 3, 2020 $19.13 $21.34 11.6% Increase
May 4, 2020 $18.55 $19 2.4% Increase
February 19, 2020 $21.49 $22.05 2.6% Increase
October 30, 2019 $23.22 $22.31 −3.9% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.03, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.03 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

The Williams Companies, Inc. is currently trading at $19.20/share, down −3.8% for the day. The company is trading at approximately 79.4% of its 52-week high of $24.17/share. The company’s stock price is down −10.0% since the last earnings report and down −2.5% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 44.73 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:WMB Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 162.94 and a forward P/E multiple of 18.85.

The Williams Companies, Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.91. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $19.20
P/E Ratio 162.9x
P/E Ratio (Fwd) 18.9x
PEG Ratio 1.2
Total Debt / Total Capital 45.8%
Levered Free Cash Flow $1.935 billion
EV / EBITDA 10.2x

Finbox

The Williams Companies, Inc. is a large-cap stock with a market capitalization of $23.3 billion and a total enterprise value of $48.019 billion. The company operates in the Energy sector and the Oil, Gas & Consumable Fuels industry.

The Williams Companies, Inc., together with its subsidiaries, operates as an energy infrastructure company primarily in the United States. It operates through Atlantic-Gulf, Northeast G&P, and West segments. The Atlantic-Gulf segment comprises Transco, an interstate natural gas pipeline; and natural gas gathering and processing, and crude oil production handling and transportation assets. The Northeast G&P segment engages in the midstream gathering, processing, and fractionation activities. The West segment comprises Northwest Pipeline, an interstate natural gas pipeline; and gas gathering, processing, and treating operations. The company owns and operates 30,000 miles of pipelines, 28 processing facilities, 7 fractionation facilities, and approximately 23 million barrels of NGL storage capacity. The Williams Companies, Inc. was founded in 1908 and is headquartered in Tulsa, Oklahoma.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.