Williams Partners L.P. (WPZ) is a master limited partnership yielding an impressive 5.7%. The partnership is also expected to grow earnings per unit by 22% in 2011.
This growth should allow Williams Partners to increase its distribution by 6-10% in both 2011 and 2012.
It is a Zacks #2 Rank (Buy) stock.
Business Description
Williams Partners L.P. is an integrated natural gas company. It primarily finds, produces, gathers, processes and transports natural gas.
The Williams Companies (WMB) owns approximately 75% of Williams Partners, including the general-partner interest.
Income
The partnership pays a distribution that currently yields a stellar 5.7%. It has a history of raising its quarterly distribution since going public in 2005. It held it steady throughout the financial crisis and began raising it again in the second quarter of 2010:
Expect more increases on the way too. The partnership expects to raise distributions by 6-10% in both 2011 and 2012.
Fourth Quarter Results
The partnership reported its results for the fourth quarter of 2010 on February 17. Earnings came in at 76 cents per unit, beating the Zacks Consensus Estimate by 4 cents.
Revenues for the quarter were $1.498 billion, a 14% increase over the same quarter in 2009. Distributable cash flow attributable to partnership operations was $335 million, a 40% increase from the previous quarter.
Outlook
Analysts almost unanimously raised their earnings estimates following the strong Q4 beat. The Zacks Consensus Estimate for 2011 is now $3.25, representing 22% growth.
The 2012 consensus estimate is currently $3.52, equating to 8% growth.
It is a Zacks #2 Rank (Buy) stock.
The stock trades at 15.9x forward earnings, a discount to the industry average of 20.5x. Historically, shares have traded with a forward P/E of 16.1x.
It also trades at 0.6x book value, a discount to the industry average of 2.1x.
Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.
WILLIAMS PTNRS (WPZ): Free Stock Analysis Report
Zacks Investment Research
