WMB 44.31 (-1.03%)
US9694571004Oil & GasOil & Gas Midstream

Last update on 2024-06-06

Williams Companies (WMB) - Piotroski F-Score Analysis for Year 2023 (Final Score: 7/9)

Williams Companies (WMB) Piotroski F-Score for 2023 scores 7 out of 9, indicating strong financial health. Learn more about WMB's profitability, liquidity, and efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 7

We're running Williams Companies (WMB) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

The Piotroski F-Score for Williams Companies (WMB) based on a 9-criteria system to assess profitability, liquidity, and operating efficiency is 7 out of a possible 9. The company shows strong profitability and efficient cash flow management but has minor issues with liquidity and shareholder value dilution.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 7, Williams Companies (WMB) emerges as a fundamentally strong stock. The high score hints at robust financial health and good operational efficiency. However, potential investors should also consider the slight liquidity issues and shareholder dilution trend before investing. Overall, it's worth further investigation.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Williams Companies (WMB)

Company has a positive net income?

Net income is a critical measure of a company's profitability. If a company shows positive net income, it indicates that the company is profitable after all expenses have been deducted from total revenue.

Historical Net Income of Williams Companies (WMB)

For the year 2023, Williams Companies (WMB) reported a net income of $3,179,000,000, which is significantly positive. This trend is favorable for the company as it demonstrates robust profitability. Over the last 20 years, the company has experienced several fluctuations, with net incomes ranging from significant losses of -$1,097,000,000 in 2010 to highs like $2,114,000,000 in 2014. In recent years, from 2019 to 2023, the trend appears to be particularly positive, showcasing a steady improvement with net incomes recorded at $850,000,000 (2019), $211,000,000 (2020), $1,517,000,000 (2021), $2,049,000,000 (2022), and $3,179,000,000 (2023). This upward trajectory suggests that the company has been effectively managing its operations and finances. Therefore, WMB gains 1 point for this positive net income.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash inflow and outflow from a company's core business operations. It is crucial as it indicates the company's ability to generate sufficient cash to maintain or expand operations without needing external financing.

Historical Operating Cash Flow of Williams Companies (WMB)

For Williams Companies (WMB), the Cash Flow from Operations in 2023 is $5.94 billion, which is notably positive. This enthusiastic figure signifies a healthy cash-generating capability from core operations, adding 1 point in the Piotroski F-Score analysis. Historically, WMB's CFO has been predominantly positive over the last 20 years, showing a consistent upward trend especially from $770 million in 2003 to the current $5.94 billion. This positive trend in CFO suggests good financial health and operational efficiency, reducing the need for WMB to rely on external financial sources for its operational needs.

Return on Assets (ROA) are growing?

ROA measures how effective a company is at turning its investments into profit. For WMB, checking whether this has improved year over year can highlight better operational efficiency.

Historical change in Return on Assets (ROA) of Williams Companies (WMB)

Williams Companies (WMB) has shown an increase in Return on Assets (ROA) from 0.0427 in 2022 to 0.0629 in 2023. This increase signifies an improvement in their efficiency at generating income from its assets, which is seen positively. This upward trend suggests that WMB's management has effectively utilized the company’s assets to produce more income, thus scoring 1 point. The firm's strategic moves have likely paid off. However, it’s notable that even with this increase, WMB's 2023 ROA of 0.0629 still falls significantly below the industry median ROA of 0.4123. This discrepancy highlights areas where WMB could further improve to match industry standards. Looking at WMB's historical data and industry medians shows a consistent lower performance, asserting their room for growth.

Operating Cashflow are higher than Netincome?

Determining whether operating cash flow (OCF) is higher than net income helps investors assess the quality of earnings, indicating the company’s ability to generate cash from operations.

Historical accruals of Williams Companies (WMB)

For 2023, Williams Companies (WMB) reported an Operating Cash Flow (OCF) of $5,938,000,000 and a Net Income of $3,179,000,000. The OCF is higher than the Net Income, which is a positive signal. This higher OCF suggests the company has strong earnings quality, as it indicates that the company’s profits are supported by actual cash flow rather than accounting adjustments. Over the last 20 years, WMB's OCF trends show consistent growth, pulling significantly ahead of Net Income in many years, except for some volatility in earlier years which shows stabilization towards recent years. This justifies awarding WMB 1 point for this criterion.

Liquidity of Williams Companies (WMB)

Leverage is declining?

Change in Leverage for Williams Companies (WMB) from 2022 to 2023 and why it is important to consider

Historical leverage of Williams Companies (WMB)

Comparing the Leverage of 0.4527 in 2022 with the Leverage of 0.4442 in 2023, we detect a slight decrease in Leverage for 2023. Hence, the Leverage ratio point for the Piotroski Score for 2023 would be 1, indicating a favorable trend. This trend may reflect prudent fiscal management and a reduction in risk exposure. Historically, WMB's Leverage has shown fluctuations, with a notable spike to 0.5072 in 2011 and troughs such as 0.2578 in 2005. The trajectory from 2021 to 2023 is stabilizing, enhancing investor confidence in WMB's fiscal responsibility.

Current Ratio is growing?

The Current Ratio compares a company's current assets to its current liabilities and indicates its capability to cover short-term obligations. It's crucial to assess liquidity and operational efficiency, with a higher ratio signifying better liquidity.

Historical Current Ratio of Williams Companies (WMB)

Comparing Williams Companies' Current Ratio of 0.7741 in 2023 with 0.7765 in 2022, there was a slight decrease. Therefore, no point is awarded as the ratio declined. Historical data shows a fluctuating trend, with WMB consistently below the industry median of 0.9371 in 2003, declining further below the median of 1.038 in recent years, indicating a persistent liquidity issue.

Number of shares not diluted?

The Piotroski analysis considers the change in shares outstanding to evaluate whether a company is issuing new shares, which can dilute existing shareholders' value. A decrease in shares outstanding is favorable.

Historical outstanding shares of Williams Companies (WMB)

Williams Companies (WMB) had 1,218,362,000 shares outstanding in 2022, which increased slightly to 1,217,784,000 in 2023. The increase in outstanding shares would result in 0 points for this criterion, indicating potential dilution of shareholder value. Over the long term, WMB has nearly doubled its share count from 516,534,653 in 2003 to 1,217,784,000 in 2023. This trend might raise concerns about continual dilution if it persists without compensatory growth in business performance or shareholder value.

Operating of Williams Companies (WMB)

Cross Margin is growing?

Gross Margin measures a company's profitability, highlighting how efficiently it turns revenue into actual profit after covering production costs. For Williams Companies (WMB), Gross Margin reflects operational efficiency in the energy sector, including natural gas infrastructure. Tracking trends in Gross Margin over time aids in assessing management's ability to control costs and improve profitability.

Historical gross margin of Williams Companies (WMB)

Williams Companies' Gross Margin increased from 0.5015 in 2022 to 0.6235 in 2023. This marks a significant improvement in profitability and cost management, resulting in a score of 1 in the Piotroski Analysis. Over the past 20 years, WMB’s Gross Margin has shown fluctuations, beginning at 0.1395 in 2003 and peaking at 0.6235 in 2023. Notably, WMB's 2023 margin surpassed the industry median of 0.4123, illustrating a period of robust operational efficiency and competitive strength within the industry.

Asset Turnover Ratio is growing?

The change in Asset Turnover ratio assesses a firm's efficiency in generating sales revenue from its assets, an important metric for operational performance.

Historical asset turnover ratio of Williams Companies (WMB)

For the Williams Companies (WMB), the Asset Turnover ratio has decreased from 0.2283 in 2022 to 0.2159 in 2023. This trend indicates a slight decline in efficiency in utilizing its assets to generate revenue. Given this decrement, WMB will receive 0 points for this criterion. In a broader view, the historical data shows fluctuations, with significantly higher ratios in the early 2000s, followed by a progressive decline, recent improvements in 2021, and a decline again in 2022 and 2023. This reflects varying operational efficiencies and possibly changes in asset bases or sales volumes over the years for WMB.


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