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The Williams Companies Inc. (WMB) is a leading provider of natural gas infrastructure across the United States, connecting about 30% of the nation’s supply.
The company generated 44% of its modified EBITDA from Transmission & Gulf of Mexico, 33% from Northeast G&P and 26% from the West with a loss from Other during the fourth quarter of 2020. In terms of revenue type, the company generated 77% of its revenue from services and 22% of its revenue from product sales during the quarter.
The Williams Companies recently reported fourth-quarter revenue that fell by 5.9% to $7.72 billion, beating consensus estimates by $200 million, with non-GAAP earnings of $1.10 per share, beating consensus estimates by three cents. Despite the drop in revenue and its lofty valuation, analysts see an improving natural gas macro backdrop and fewer relative risks.
The Biden administration’s environmental policies are already having some effects on pipeline operators, including the Keystone XL pipeline, but those changes are largely aimed at new builds. Existing midstream companies could have a brighter outlook with less competition from new builds and support for their tax-advantaged business models in a higher tax environment.
The company raised its quarterly dividend by 2.5% to $0.41 per share, which represents a 6.8% forward yield. The dividend is payable on March 29, 2021 to shareholders on record as of March 12, 2021.
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