QS Research · Michael Burry's Scion Capital analyst template · 2006
WILLIAMS COMPANIES, INC. (WMB)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction high · base case -33% · downside -47% · upside 0%
At $64.08 the market pays 15.1x TTM EV/EBITDA and 22.8x EV/EBIT for a midstream whose TTM EBITDA ($7.08B) is 33% above the FY2020-FY2025 average ($5.32B), while TTM FCF is -$1.58B after $7.64B capex and debt is $28.66B. Using today's 15.1x on normalized average EBITDA gives about $42.7/share (-33%); the same multiple on TTM EBITDA only supports today's price, so there is no upside without above-cycle earnings or a re-rating. Downside uses FY2020 operating income $2.20B plus TTM D&A $2.39B as a trough EBITDA proxy and gives about $33.9/share (-47%). The market is treating peak-ish TTM EBITDA as normal and ignoring negative FCF, leverage and insider selling; I would short.
Key numbers
- Share price: $64.08
- Market cap: $80.11B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $15.94B
- EV / EBITDA (TTM): 15.1x
- P/E (TTM): 25.7x
- Price / book: 5.10x
The 15 boxes
- ✓ 1. Long-form business notes
WMB is a fee-based natural gas infrastructure company: latest FY2025 10-K reports 11 supply areas, about 800 customers, over 32,000 pipeline miles and four reportable segments (Transmission, Power & Gulf; Northeast G&P; West; Gas & NGL Marketing Services), with Other for upstream/corporate. The oldest FY2020 10-K had three segments and 80% fee-based NGL volumes; FY2025 is 93% fee-based. The six-year XBRL shows revenue $17.77B FY2022, $12.00B FY2023, $14.90B FY2025, with operating cash flow $5.90B and capex $4.89B in FY2025; no TTM or 2026 interim data are in the sources.
- ✓ 2. Competitive advantage
WMB's advantage is physical and contractual, not a brand: an installed interstate/gathering footprint that is hard to replicate, plus long-term fee-based contracts, and the six-year XBRL record shows the profit line barely tracks the revenue line. Revenue ran $7.65B (FY2020) → $17.77B (FY2022) → $12.00B (FY2023) → $14.90B (FY2025) while operating income stayed inside a $2.20B–$4.31B band, so a 33% revenue drop from FY2022 to FY2023 came with operating income UP from $3.02B to $4.31B. Computed operating margin ranged 17.0% (FY2022) to 35.9% (FY2023) and operating cash flow rose from $3.50B (FY2020) to $5.90B (FY2025). Competition is local and asset-specific — adjacent midstream facilities, other interstate/intrastate pipelines, and power-sector fuel substitution — and FERC/state rate regulation caps what the pipes can charge.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended Sept 30, 2026) grew: total revenues $3,223 million vs $2,923 million, service revenues $2,319 million (+9%), GAAP net income $699 million / $0.56 per diluted share (+8% / +6%), Adjusted EBITDA $2.039 billion (+$119 million, +6%) and AFFO $1.589 billion (+10%). The quarter carried an $83 million gain on the Permian gathering-asset sale, and the nine-month period carries $194 million (South Mansfield, Q1 2026) and $130 million (Brazos Permian II, Q2 2026) gains on top, so the reported net income rise overstates operating progress; Adjusted EBITDA for nine months rose 9% to $6.214 billion. Management kept numeric 2026 guidance of $8.3–8.5 billion Adjusted EBITDA and $7.3–7.9 billion growth capex and said it is tracking toward the upper half of the EBITDA range, while deploying $5.1 billion on Momentum (closed Sept 3, 2026) and receiving $3.74 billion of a $5.34 billion committed Pantheon capital sale in July 2026.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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