Why Williams Partners (WPZ) Stock Is Gaining Today

NEW YORK (TheStreet) -- Williams Partners (WPZ) was gaining 7.5% to $56.90 Monday after announcing that it will acquire Access Midstream Partners (ACMP).

Williams Partners will pay $6 billion for Access Midstream. According to Bloomberg, the combined companies would have a market value of about $36.9 billion. The deal would make the combined companies one of the largest U.S. fuel transporters.

Must read: Warren Buffett's 25 Favorite Stocks

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings team rates WILLIAMS PARTNERS LP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate WILLIAMS PARTNERS LP (WPZ) a BUY. This is driven by a few notable 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 increase in net income, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income increased by 2.3% when compared to the same quarter one year prior, going from $344.00 million to $352.00 million.
  • 39.93% is the gross profit margin for WILLIAMS PARTNERS LP which we consider to be strong. Regardless of WPZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WPZ's net profit margin of 20.79% significantly outperformed against the industry.
  • Net operating cash flow has slightly increased to $549.00 million or 7.43% when compared to the same quarter last year. Despite an increase in cash flow, WILLIAMS PARTNERS LP's average is still marginally south of the industry average growth rate of 17.38%.
  • WILLIAMS PARTNERS LP's earnings per share declined by 28.0% 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 PARTNERS LP reported lower earnings of $1.45 versus $1.94 in the prior year. This year, the market expects an improvement in earnings ($2.06 versus $1.45).
  • WPZ, with its decline in revenue, slightly underperformed the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: WPZ Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

More from Markets

Asia Markets Fall on Latest Tariff Threats From Trump

Asia Markets Fall on Latest Tariff Threats From Trump

Google Invests in JD.com; Comcast-Disney Battle Nears Head -- ICYMI

Google Invests in JD.com; Comcast-Disney Battle Nears Head -- ICYMI

REPLAY: Jim Cramer on Tariff Worries, Oil, Alphabet and Centene

REPLAY: Jim Cramer on Tariff Worries, Oil, Alphabet and Centene

Video: Athens Stock Exchange CEO on What's Next for Greece's Debt Woes

Video: Athens Stock Exchange CEO on What's Next for Greece's Debt Woes

Dow Drops Over 100 Points on Trade War Worries

Dow Drops Over 100 Points on Trade War Worries