Market Overview

This Analyst Likes Williams Companies Business Model

Share:
This Analyst Likes Williams Companies Business Model
Related WMB
Cushing Enters ETF Space With MLP-Related Sector Funds
Earnings Scheduled For October 31, 2018
Brookfield Asset Management Inc. Buys GrafTech International, Brookfield Property Partners LP, ... (GuruFocus)

Williams Companies Inc (NYSE: WMB), a provider of large-scale infrastructure connecting natural gas and related products to end markets, is a pure play on domestic natural gas production with an attractive business model, according to Stifel.

The Analyst

Stifel's Selman Akyol initiated coverage of Williams Companies with a Buy rating and $35 price target.

The Thesis

Williams Companies is structured to be located nearly every major U.S. shale basin and is responsible for transporting nearly 30 percent of all natural gas consumption in the U.S., Akyol said in a note. The company is also set up so that around 60 percent of cash flows are volume-protected through long-haul transport contracts along with minimum volume and cost of service agreements. More than 95 percent of the company's cash flows come from fee-based sources, which implies the it's more levered to natural gas demand and volumes rather than price.

The company's structure should help it maintain a top tier distribution coverage, including a dividend growth in the mid-teens along with an investment grade balance sheet with a leverage below five times through at least 2020, the analyst said. Beyond the start of next decade, the company stands to benefit from its largest Transco project which will soon be put into service and provide investment opportunities well into the 2020s.

Akyol said the stock is trading at 13 times 2019 EBITDA, which implies it has room to expand given a simplified business structure that should result in cash flow growth over the coming years.

Price Action

Shares of Williams Companies were trading around $31.56 at time of publication.

Related Links:

Jefferies Downgrades ONEOK On Valuation, But Says It's A Favorite US Midstream Pick

Jefferies Issues MLP Update With New Franchise Pick

Latest Ratings for WMB

DateFirmActionFromTo
Nov 2018MizuhoInitiates Coverage OnBuy
Nov 2018Bank of AmericaMaintainsBuyBuy
Oct 2018Credit SuisseInitiates Coverage OnOutperform

View More Analyst Ratings for WMB
View the Latest Analyst Ratings

Posted-In: energy Natural Gas Selman Akyol StifelAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga

 

Related Articles (WMB)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
DLTRBernsteinUpgrades0.0
CNPUBSUpgrades34.0
UGIUBSDowngrades63.0
ATOUBSDowngrades106.0
CSCONomuraDowngrades50.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

China Rapid Finance Faces Regulatory Headwinds, Jefferies Says In Downgrade

Etsy Soars Higher After Q2 Report, But Analyst Opinions Remain Mixed