What to Expect From Williams Q2 Earnings

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After markets close Monday, the Williams Companies Inc. (NYSE: WMB) is scheduled to report second-quarter earnings. Analysts on average estimate earnings per share (EPS) of $0.22 and revenues of $1.79 billion, compared with the second quarter of last year when EPS came in at $0.15 on $1.84 billion in revenue.

The Williams master limited partnership (MLP), Williams Partners L.P. (NYSE: WPZ), is also set to report earnings after the bell. Analysts anticipate revenues of $1.87 billion, compared with $1.62 billion in the year-ago quarter. One estimate, from Jefferies, for second-quarter earnings per unit is $0.17.

The big news for Williams in the second quarter was the termination of its proposed $37 billion merger with Energy Transfer Equity L.P. (NYSE: ETE). The termination cost six Williams directors their board seats, after an attempt to boot CEO Alan Armstrong narrowly failed. The legal issues will take some time to sort out, but Williams has said it would seek up to $10 billion in damages from Energy Transfer Equity because Williams doesn’t believe that it had the right to end the deal, especially after Williams shareholders had approved it.

Shortly after the deal was terminated, Goldman Sachs initiated coverage on Williams with a Buy rating and a price target of $25, reinstating coverage of Williams based on its strong position in the country’s natural gas infrastructure, the strength of growth projects at Williams Partners and modest valuation compared with midstream competitors operating as C-corporations instead of MLPs. Goldman even reflected on a possible dividend cut, saying that was a buying opportunity for Williams stock.

In late July, Jefferies weighed in on Williams Partners, downgrading the common units from Buy to Hold while maintaining the $40 price target. The analysts noted:

Shares are up ~183% from February lows, and given the termination of the ETE/WMB merger, we feel the opportunity set for WPZ is now better understood and the stock presents a balanced risk/reward profile.

Jefferies also has a Buy rating on Williams stock and a price target of $24.52. Shares traded at $22.75 just after noon hour Monday, down about 5% in a 52-week range of $10.22 to $55.42. The consensus 12-month price target is $29.36. The company pays an annual dividend of $2.56, for a yield of 10.68%.

Common units of Williams Partners traded at $35.88 Monday, down nearly 4%, in a 52-week range of $12.69 to $45.96. The consensus price target on the stock is $55.00. The pipeline partnership pays an annual distribution of $3.40 for a dividend yield of 9.11%.

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