Strong Gross Profit Margin
Strong Net Profit Margin
Good Return on Equity
Interest Coverage Ratio
📈 Strong Performance and Growth
🛡️ Strong Competitive Position
🌱 Emission Reduction Initiatives
🌟 Robust Growth Projects
🔋 Diversification into Data Centers
📈 Long-Term Growth Opportunities
High Price-to-Earnings Ratio
Elevated Price-to-Sales Ratio
High Operating Cash Flow Valuation
High Debt Levels
Low Liquidity Ratios
Overall, Williams Companies demonstrates a strong business model with a solid competitive position and strategic focus on natural gas. Their future prospects are promising with a robust pipeline of projects and diversification into new markets, although they need to navigate regulatory challenges and market dynamics effectively.
Analysis Date: February 13, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$70.26
Current Market Price: $54.64
IV/P Ratio: 1.29x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
22.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for WMB
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (29.90)
P/B ratio ≤ 1.5 (5.35)
Current ratio ≥ 2.0 (0.50x)
Long-term debt < Net current assets (-9.33x)
Margin of safety (22.0%)
WMB does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
WMB's net profit margin of 20.91% indicates effective cost management and operational efficiency, translating to solid profitability.
With a return on equity of 17.94%, WMB demonstrates a strong ability to generate returns for its shareholders, which is a positive sign for investors.
The EV/Operating Cash Flow ratio of 19.01 suggests that the stock may be overvalued relative to its operating cash flow, which raises concerns for potential investors.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
17.94%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
0.89%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
54.64%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
20.91%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
An interest coverage ratio of 2.51 indicates that WMB generates sufficient earnings to cover its interest expenses, showcasing financial stability.
With a debt-to-equity ratio of 2.17 and a debt-to-assets ratio of 49.40%, WMB is heavily leveraged, which poses risks in economic downturns.
Current ratio of 0.50 and quick ratio of 0.45 indicate potential liquidity issues, suggesting that WMB may struggle to meet short-term obligations.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
2.17x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
0.50x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
WMB reported record adjusted EBITDA for 2024, achieving $7.08 billion, which exceeded guidance by $130 million. This marks the 12th consecutive year of earnings growth, showcasing the resilience of the business model even with low natural gas prices.
Williams has a natural gas-focused strategy that differentiates it from its peers, allowing the company to capitalize on high returns from its projects. The company has effectively consolidated its interests in key areas, enhancing its competitive moat.
The company has replaced 92 outdated compressor units to reduce emissions, demonstrating commitment to sustainability while also enhancing operational efficiency. This aligns with customer demands for lower emissions.
WMB has a backlog of 30 interstate transmission projects, indicating strong growth potential. The company anticipates placing into service eight interstate transmission projects totaling 1.25 Bcf per day in the upcoming year, which will drive earnings growth.
The company is well-positioned to capitalize on the growing demand for energy from data centers. They are developing projects that could integrate gas supply and power generation, diversifying their revenue streams.
WMB's long-term strategy aims for 5% to 7% earnings growth. With potential upside from new projects and increasing demand for natural gas, the company is optimistic about exceeding these targets.