How Smart Investors Look at Williams Companies (WMB).

Williams Companies logged a -1.4% change during today's evening session, and is now trading at a price of $34.41 per share.

Over the last year, Williams Companies logged a 3.3% change, with its stock price reaching a high of $37.45 and a low of $27.8. Over the same period, the stock underperformed the S&P 500 index by -11.7%. As of April 2023, the company's 50-day average price was $35.16. The Williams Companies, Inc., together with its subsidiaries, operates as an energy infrastructure company primarily in the United States. Based in Tulsa, OK, the large-cap Utilities company has 5,043 full time employees. Williams Companies has offered a 5.1% dividend yield over the last 12 months.

The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:

2018 2019 2020 2021 2022 2023
Revenue (MM) $8,686 $8,201 $7,719 $10,627 $10,965 $11,053
Revenue Growth n/a -5.58% -5.88% 37.67% 3.18% 0.8%
Operating Margins 9% 23% 28% 25% 28% 39%
Net Margins 4% 10% 3% 15% 19% 26%
Net Income (MM) $348 $850 $211 $1,562 $2,117 $2,832
Net Interest Expense (MM) $1,160 $1,218 $1,192 $1,190 $1,167 $1,249
Depreciation & Amort. (MM) $1,725 $1,714 $1,721 $1,842 $2,009 $2,047
Earnings Per Share -$0.16 $0.7 $0.17 $1.24 $1.67 $2.22
EPS Growth n/a 537.5% -75.71% 629.41% 34.68% 32.93%
Diluted Shares (MM) 974 1,214 1,215 1,218 1,223 1,222
Free Cash Flow (MM) $37 $1,584 $2,257 $2,706 $2,636 $2,693
Capital Expenditures (MM) $3,256 $2,109 $1,239 $1,239 $2,253 $2,651
Current Ratio 0.81 0.4 0.62 0.91 0.78 0.77
Total Debt (MM) $22,414 $22,288 $22,344 $23,675 $22,904 $23,346
Net Debt / EBITDA 8.92 6.05 5.66 4.92 4.53 3.35

Williams Companies has growing revenues and a flat capital expenditure trend and exceptional EPS growth. Additionally, the company's financial statements display decent operating margins with a positive growth rate and irregular cash flows. However, the firm has a highly leveraged balance sheet.

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

Williams Companies has a trailing twelve month P/E ratio of 15.4, compared to an average of 17.53 for the Utilities sector. Based on its EPS guidance of $1.87, the company has a forward P/E ratio of 18.8. According to the 43.8% compound average growth rate of Williams Companies's historical and projected earnings per share, the company's PEG ratio is 0.35. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 11.2%. On this basis, the company's PEG ratio is 1.38. This implies that the shares are fairly valued. In contrast, Williams Companies is likely overvalued compared to the book value of its equity, since its P/B ratio of 3.55 is higher than the sector average of 1.71. The company's shares are currently trading 56.1% above their Graham number. Ultimately, Williams Companies's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.

There's an Analyst Consensus of Some Upside Potential for Williams Companies:

The 20 analysts following Williams Companies have set target prices ranging from $34.0 to $43.0 per share, for an average of $38.55 with a buy rating. As of April 2023, the company is trading -8.8% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Williams Companies has an average amount of shares sold short because 2.2% of the company's shares are sold short. Institutions own 88.5% of the company's shares, and the insider ownership rate stands at 0.35%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 11% stake in the company is worth $4,411,926,097.

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.