Williams Companies’ weekly performance
Williams Companies (WMB) underperformed the Alerian MLP ETF (AMLP) and the SPDR S&P 500 ETF (SPY) (SPX-INDEX) last week, falling 1.3%. At the same time, AMLP fell 1.1% while SPY rose 1.4%. WMB forms 0.12% of SPY.
Williams Companies’ fall can be attributed to a general negative sentiment in the midstream sector last week after US crude oil fell below $50 per barrel. WMB and its midstream subsidiary, Williams Partners (WPZ), have crude oil exposure through their NGLs (natural gas liquids) and Petchem businesses. However, WPZ’s commodity price exposure is expected to fall significantly after its sale of the Geismar Plant. For more details, read Analyzing Williams Partners’ Geismar Olefins Plant Sale.
Williams Companies’ YTD returns
WMB has fallen 3.6% YTD (year-to-date). In comparison, WMB’s peers TransCanada (TRP) and Enterprise Products Partners (EPD) have risen 3.9% and 2.4%, respectively. AMLP has fallen 0.3% so far in 2017.
Williams Companies’ underperformance relative to AMLP’s can be attributed to the sharp fall in its stock price following its financial reorganization announcement. The announcement included its removal of IDRs (incentive distribution rights) from Williams Partners’ capital structure, its conversion of economic GP (general partner) interest in WPZ to non-economic GP interest, and WPZ’s distribution cuts. These measures are negative for Williams Companies in the short term, but the company expects to benefit from them in the long term.
In this series, we’ll try to find out whether WMB can gain upward momentum from here. We’ll look into WMB’s technical indicators, including its moving averages and implied volatility. Following this, we’ll look into WMB’s valuation and analyst projections.