NEW YORK (TheStreet) -- Shares of Williams Cos. Inc. (WMB) are up 10.24% to $52.01 in pre-market trading after the energy infrastructure company agreed to pay about $6 billion to expand its ownership of Acess Midstream Partners LP (ACMP), a move to increase their presence in areas with growing energy output from shale formations, the Wall Street Journal reports.
Williams would acquire from Global Infrastructure Partners II the remaining 50% of the privately held general-partner interests in Access Midstream that the Tulsa, OK., company didn't already own. Williams also would acquire 55.1 million of Access's limited-partner units, bringing William's stake in the limited partnership to 50%, the Journal said.
"We rate WILLIAMS COS INC (WMB) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, WMB's share price has jumped by 37.67%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- 38.99% is the gross profit margin for WILLIAMS COS INC which we consider to be strong. Regardless of WMB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WMB's net profit margin of 8.00% compares favorably to the industry average.
- WILLIAMS COS INC's earnings per share declined by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, WILLIAMS COS INC reported lower earnings of $0.64 versus $1.16 in the prior year. This year, the market expects an improvement in earnings ($1.12 versus $0.64).
- WMB, with its decline in revenue, slightly underperformed the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 3.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 13.0% when compared to the same quarter one year ago, dropping from $161.00 million to $140.00 million.
- You can view the full analysis from the report here: WMB Ratings Report