A Short Intro for Williams Companies Investors

Today we're going to take a closer look at large-cap Utilities company Williams Companies, whose shares are currently trading at $35.02. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!

A Very Low P/E Ratio but Trades Above Its Graham Number:

The Williams Companies, Inc., together with its subsidiaries, operates as an energy infrastructure company primarily in the United States. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 22.89 and an average price to book (P/B) ratio of 1.03. In contrast, Williams Companies has a trailing 12 month P/E ratio of 15.7 and a P/B ratio of 3.66.

Williams Companies's PEG ratio is 4.95, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Exceptional Profitability Overshadowed by Excessive Leverage:

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $8,201 $7,719 $10,627 $10,965
Gross Margins 53.9% 56.8% 44.7% 50.2%
Operating Margins 29.1% 33.3% 24.8% 27.5%
Net Margins 10.36% 2.73% 14.27% 18.69%
Net Income (MM) $850 $211 $1,517 $2,049
Net Interest Expense (MM) -$1,186 -$1,172 -$1,179 -$1,147
Depreciation & Amort. (MM) -$1,714 -$1,721 -$1,842 -$2,009
Earnings Per Share $0.7 $0.17 $1.24 $2.23
EPS Growth n/a -75.71% 629.41% 79.84%
Diluted Shares (MM) 1,214 1,215 1,218 1,216
Free Cash Flow (MM) $1,544 $2,221 $2,698 $2,606
Capital Expenditures (MM) -$2,149 -$1,275 -$1,247 -$2,283
Net Current Assets (MM) -$28,096 -$28,153 -$28,962 -$30,591
Current Ratio 0.4 0.62 0.91 0.78
Long Term Debt (MM) $20,148 $21,451 $21,650 $21,927
Net Debt / EBITDA 5.39 6.98 4.36 4.04

Williams Companies benefits from growing revenues and a flat capital expenditure trend, strong margins with a stable trend, and exceptional EPS growth. The company's financial statements show wider gross margins than its peer group and consistent free cash flow. However, the firm has a highly leveraged balance sheet.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.