It hasn't been a great evening session for Williams Companies investors, who have watched their shares sink by -1.1% to a price of $34.67. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
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 17.53 and an average price to book (P/B) ratio of 1.71. In contrast, Williams Companies has a trailing 12 month P/E ratio of 15.2 and a P/B ratio of 3.57.
Williams Companies's PEG ratio is 2.37, 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.
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.
