Tumbling to a price of $33.83 during today's morning trading session, shares of Williams Companies are now -9.45% below their average target price of $37.36. Does this mean the stock will reverse course? Analysts are giving WMB an average rating of buy and target prices ranging from 30 to 42 dollars per share.
The market seems to share this optimistic view, since Williams Companies has a short interest of only 1.7% (this is the percentage of the share float that is being shorted). Each short position represents an investor's expectation that the price of the stock will decrease in the future.
Another way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Williams Companies, institutional investors own 88.2% of the shares, which indicates they have a very high stake in the company. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in WMB, it probably means they believe it is a solid investment choice.
To sum up, Williams Companies is probably the subject of exuberant market sentiment because of an analyst consensus of some upside potential, a buy rating, a very low short interest, and a significant number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about WMB:
The stock has trailing 12 month earnings per share (Eps) of $1.64
Williams Companies has a trailing 12 month Price to Earnings (P/E) ratio of 20.6 compared to the S&P 500 average of 15.97
The company has a Price to Book (P/B) ratio of 3.7 in contrast to the S&P 500's average ratio of 2.95
Williams Companies is a Energy company, and the sector average P/E and P/B ratios are 9.11 and 1.45 respectively