Williams Companies (WMB), the midstream c-corp general partner of Williams Partners (WPZ), fell 1.2% last week. At the same time, the Alerian MLP ETF (AMLP) and the SPDR S&P 500 ETF (SPY)(SPX-INDEX) were down 0.6% and 0.2%.
WMB’s decline could be due to general negative sentiment in the sector, considering the recent decline in crude oil prices. The decline in WTI (West Texas Intermediate) prices is mostly due to increased drilling activity in the United States, which is expected to extend the existing glut. However, WMB might bounce back, given its subsidiaries’ low crude oil exposure.
Receive e-mail alerts for new research on WMB:
Interested in WMB?
Don’t miss the next report.
WMB is currently trading below the levels during the beginning of 2017. It fell 7.5% YTD (year-to-date). In comparison, WMB’s peer TransCanada Corporation (TRP) has gained 1.8% while Enbridge (ENB) and Energy Transfer Equity (ETE) have fallen 2.5% and 3.0%, respectively. AMLP has gained 0.4% in 2017.
Williams Companies’ underperformance relative to AMLP could be due to the sharp decline in its stock prices following the financial reorganization announcement. This initiative included the removal of IDRs from Williams Partners’ (WPZ) capital structure, the conversion of economic GP (general partner) interest in WPZ to non-economic GP interest, and WPZ’s distribution cut. The measures are negative for Williams Companies in the short run. However, the company expects to benefit in the long run.
In this series, we’ll try to find out whether WMB can gain upward momentum from here. We’ll look into WMB’s price outlook using a few technical indicators, including moving averages and the relative strength index. Next, we’ll look into WMB’s valuation and analyst projections.