WMB
The Williams Companies, Inc.
$78.47
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 46.7% above fair value
You pay
$78.47
Bear
$42.78
Fair
$53.48
Bull
$64.18
Bear
$42.78
-45.5%
$2.56 × 13x P/E
Fair
$53.48
-31.9%
$2.56 × 16x P/E
Bull
$64.18
-18.2%
$2.56 × 19x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
30.6x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $83.50 from 34 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $53.48 per share.
Warnings
The company pays out 96% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $55.99 (above our primary estimate by 38%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $83.50 (from 34 analysts). Our estimate is 51% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples