Williams Cos Third Quarter Earnings Preview

By Investopedia Staff | October 25, 2012 AAA

Williams Cos (NYSE:WMB) will release its third quarter results on Tuesday, October 30, 2012. Analysts are expecting earnings per share of 27 cents after the company booked a profit of only 40 cents a share a year earlier.

In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: 5 Tricks Companies Use During Earnings Season

What to Expect: Analysts are expecting Williams to announce earnings of 27 cents per share, 32.5% less than a year ago, when the company reported earnings of 40 cents per share.

The consensus estimate, while unchanged in the past month, is down from 29 cents three months ago. For the fiscal year, analysts are projecting earnings of $1.17 per share.

Williams' expected revenue of $2.07 billion for the quarter is below last year's reported figure of $2.7 billion by 23.4%. The anticipated revenue for the fiscal year is $7.87 billion.

Company Performance: Williams has reported declines in revenue for the past three quarters. In the most recent quarter, it fell 30.8% to $1.85 billion. Previously, revenue slipped 21.6% in the first quarter and more than twofold in the fourth quarter of the last fiscal year.

The P/E ratio for WMB is 55.0, above the industry average of 22.48. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: The P/E Ratio: A Good Market-Timing Indicator

Over the past quarter, the stock price has increased from $31.60 on July 27, 2012 to $34.66. Currently, Williams' stock is on a downward trend. The share price has fallen $2.11 since October 16, 2012.

The Competition: Williams Companies is engaged in finding, producing, gathering, processing and transporting natural gas. Most analysts (nine of 10) rate Williams a buy. This rating hasn't changed in three months.

The company's closest competitor in the oil and gas operations industry is Southwestern Energy (SWN). Analysts are more optimistic about Williams than about Southwestern Energy. Only 12 out of 26 analysts rate the latter a buy.

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