Williams Companies (WMB): Will it Miss on Earnings in Q3?
North American energy firm, Williams Companies Inc. (WMB) is set to release third-quarter 2014 financial results after the closing bell on Oct 29.
The company’s average surprise for the last four quarters stands at 14.72%. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
For the most of the third quarter, natural gas traded below $4 per MMBtu, which is not reflective of a healthy pricing environment. This unfavourable pricing scenario is likely to have provided little incentive for the upstream energy players to produce the commodity which in turn might have called for lower midstream activities. Since Williams Companies’ involves in the finding, producing, gathering, processing, and transportation of natural gas, its third-quarter earnings might have suffered.
The company’s fundamentals do not look too good either. Williams Companies had a high debt-to-capitalization ratio of 67.4% (as of Jun 30, 2014). Moreover, its price to earnings ratio as well as price to sales ratio is substantially higher than its peer group average. These factors make the company more vulnerable than its peers.
Earnings Whispers
Our proven model does not conclusively show that Williams Companies is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This indicates an ESP of -9.09% for Williams as the Most Accurate estimate stands at 20 cents while the Zacks Consensus Estimate is pegged higher at 22 cents.
Zacks Rank: Williams has a Zacks Rank #5 (Strong Sell). We caution investors against Sell rated (Rank #4 or 5) stocks especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Cobalt International Energy Inc. (CIE), with Earnings ESP of +11.11% and a Zacks Rank #1 (Strong Buy).
Delek Logistics Partners, LP (DKL), with Earnings ESP of +5.56% and a Zacks Rank #1.
Alon USA Energy Inc. (ALJ), with Earnings ESP of +1.75% and a Zacks Rank #2 (Buy).
Read the Full Research Report on WMB
Read the Full Research Report on CIE
Read the Full Research Report on ALJ
Read the Full Research Report on DKL
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