Williams (WMB): The $0.68 Headline Is 26% Air - And We Sit Below Every Analyst

The Williams Companies, Inc. (WMB) Q2 2026 — Q2 2026 (quarter ended June 30, 2026): revenue $3,053M, +9.8% y/y vs a tracked $2,828M bar. GAAP diluted EPS $0.68 (+51%); ADJUSTED diluted EPS $0.50 (+8%) against a $0.52 Zacks bar - so the adjusted line was a small MISS. Adjusted EBITDA $1,921M (+6.2%). AFFO $1,450M (+10.1%). Leverage 3.67x. The 8-K landed 4:18 p.m. ET Monday Aug 3, so the $71.51 close on the 4th is the reaction: +1.53%. Williams reported GAAP EPS of $0.68, up 51%, beat on revenue, raised full-year guidance and announced a $5.5B acquisition of Momentum Midstream - all in one release. The stock rose 1.5%. We think the market was right, and this episode is the arithmetic. The release prints BOTH bases: GAAP $0.68 and ADJUSTED $0.50. We proved which is which - the SEC's XBRL series gives 2025 quarterly diluted EPS of $0.56, $0.45, $0.53 and $0.60, summing to the reported FY2025 $2.14 exactly, so that series is GAAP. The Street bar is the adjusted one, making this a small MISS versus $0.52, not a 51% beat. The $213M gap between $827M reported and $614M adjusted net income is a $126M gain on selling Brazos Permian II, $12M of other asset-sale gains and a $106M favourable swing in unrealised derivative marks. None of it moved a molecule of gas. The revenue beat has the same problem: $94M of the revenue LINE is a non-cash derivative gain - 42% of the entire $225M beat. Of the $272M y/y revenue increase, only $111M was service revenue, the actual toll road, up 5.4%. Then the guidance raise: +$200M to an $8.4B midpoint, attributed by the company to the Momentum deal, which has NOT closed. Organic guidance was unchanged - and growth capex guidance went UP $300M. They raised spending by more dollars than earnings. Meanwhile first-half AFFO of $3,220M came in BELOW $3,284M of capital investments; a year earlier that was a $1,053M surplus. The sign flipped. Our model: EV of $120.7B on $8.4B of guided EBITDA is 14.4x against a peer median of 11.2x. Our DCF charges growth capital as real cash, discounts at 7.0% with 2.5% terminal growth, and lands at $71.11 - with 91% of value in the terminal year. HOLD, 3/5. Not a criticism of the business. A comment on the price. THE CALL: HOLD (3/5, A GENUINELY GOOD BUSINESS AT A PRICE THAT LEAVES YOU NO MARGIN OF SAFETY) — base-case value ~$71.0 vs ~$71.76 today. KEY METRICS: - CALL: HOLD 3/5, fair value ~$71 vs the $71.76 close (-1%). Bull $85, bear $60. Street: 34 analysts, Buy, $84.31 avg, low $75 - we sit below every target. - Revenue $3,053M +9.8% vs a $2,828M bar. Adjusted EPS $0.50 (+8%) vs a $0.52 Zacks bar. GAAP EPS $0.68 (+51%). Adj EBITDA $1,921M +6.2%. AFFO $1,450M +10.1%. - Leverage 3.67x. Dividend $2.10, covered 2.26x. Capex $1,642M EXCEEDED AFFO. 2026 guide raised $200M to $8.4B - all from the unclosed Momentum deal. What to watch: UP: a standalone Power Innovation disclosure with real returns; an ORGANIC guidance raise with no acquisition behind it; Momentum closing at or better than ~8.5x 2027 EBITDA; capital investments falling back below AFFO. DOWN: growth capex guided above $7.9B again; leverage past 3.9x; a Socrates phase-two delay; another quarter where cash from operations FALLS while adjusted EBITDA rises. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.