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Is Williams Companies Attractive from a Long-Term Perspective?

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Is Williams Companies Attractive from a Long-Term Perspective? PART 1 OF 12

What Drove Williams Companies’ Strong YTD Stock Performance?

Williams Companies’ YTD returns

Williams Companies (WMB), the midstream C corporation GP (general partner) of Williams Partners (WPZ), has risen 23.0% YTD (year-to-date). In comparison, WMB peers Energy Transfer Equity (ETE), Enbridge (ENB), and Spectra Energy (SE) have risen 23.7%, 27%, and 71.6%, respectively, in 2016. However, WMB and most of its peers are still trading below their levels before the rout in energy prices. WMB’s strong YTD gains despite recent dividend cuts indicate that investors are rewarding companies for improvement in balance sheet position and not penalizing dividend cuts in the current low energy price environment.

What Drove Williams Companies’ Strong YTD Stock Performance?

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WMB has gained 163.8% since its February lows and 51.6% since the merger termination announcement with ETE at the end of June 2016. The Alerian MLP ETF (AMLP), which comprises of 26 midstream energy MLPs, has risen 52.9% since its all-time low in February 2016.

WMB’s huge gains could be attributed to the slight recovery in crude oil prices and measures undertaken by WMB and its subsidiary, Williams Partners, to lower their leverage and commodity price exposure. The Williams franchise is aiming to lower its commodity price exposure by strengthening its natural-gas-focused strategy.

A look at WMB’s moving averages

Currently, WMB is trading 5.2% above its 50-day moving average and 31.3% above its 200-day moving average. Plus, the 50-day moving average surpassed the 200-day moving average in August 2016, indicating a bullish trend in WMB’s stock.

Later in the series, we’ll analyze WMB’s operating performance, balance position, and cash flow measures. Following an analysis of WMB’s operating results, we’ll also look into WMB’s valuations, commodity price exposure, key performance indicators, and analyst projections.

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