William Partners L.P. is set to report fourth-quarter 2016 results after the closing bell on Feb 15. In the preceding quarter, the partnership posted apositive earnings surprise of 68% — turning around from the negative surprises in the previous two quarters of 2016. It is to be noted that William Partners posted average negative earnings surprise of 72.26% for the last four quarters.

Let’s see how things are shaping up for this announcement.

Factors at Play

Based in Tulsa, OK, Williams Partners LP is an energy infrastructure player, engaged in the gathering and processing of natural gas.

The energy market witnessed prolonged weakness since mid-2014 after oil and natural gas supply surpassed demand. This in turn brought down the prices of various stocks. However, the scenario has been improving off late since OPEC agreed modest oil output curbs for the first time since 2008.  The entire sector therefore remains optimistic about the commodity price recovery.

The price of natural gas was above the psychological mark of $3 per MMBtu owing to the forecast of cold weather. The improvement in commodity prices is favorable for production which in turn will boost transportation and storage activities. This in turn could generate significant cash flow for midstream players like William Partners.

In the last three months the units of William Partners gained 17.5 % as against 15.5% growth for the Zacks categorized Energy and Pipeline MLP industry.

However, analyzing the financials of the William Partners and comparing it with other energy firms, certain data seem to be unfavorable for the partnership. For example, the current ratio of William Partners stands at 0.63 which denotes lower liquidity than partnership like Tallgrass Energy GP LP . Moreover, Zacks Consensus Estimate has been revised downwards over a period of 30 days by five cents.  

Earnings Whispers

Our proven model does not conclusively show that William Partners L.P. is likely to beat earnings in the to-be reported quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP:  Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Zacks Rank: William Partners carries a Zacks Rank #3 (Hold) which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies for investors to consider, that, according to our model have the right combination of elements to post an earnings beat this quarter:  

Southwestern Energy Company , which is expected to release earnings results on Feb 23, has an Earnings ESP of +8.33% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources, Inc. (EOG Quick QuoteEOG - Free Report) has an Earnings ESP of +6.67% and a Zacks Rank #3. The company is expected to release earnings results on Feb 27.

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