On the four Ms, Williams Companies earns 47 for management and 56 for moat. The management score rests on a return on invested capital of 6.2% and a gross margin of 42.9% — figures that describe returns closer to the cost of the capital behind them. The balance sheet carries debt at 2.30x equity, which magnifies both the returns above and the risk beneath them.
Three independent anchors set the price worth paying. Growth is modelled at 9.1% a year, the rate measured from the filings. The exit multiple assumed is 18.3x. That produces an intrinsic value of $27.27, a 10-CAP price of $13.47 and a payback time price of $16.29, with the value zone set at the highest of the three, $16.29. Today's price of $69.22 is 325% above it.
The price is above the value zone and the business scores 56 for moat and 47 for management. Neither test argues for paying up here.
| Price | $69.22 |
| Market cap | $84.7B |
| P/E ratio | 27.5x |
| Return on invested capital | 6.2% |
| Gross margin | 42.9% |
| Debt to equity | 2.30x |
| Free cash flow yield | 1.4% |
| Growth rate used | 9.1% |
| Growth rate measured | 9.0% |
| Exit multiple assumed | 18.3x |
| Company | Moat | Buy price |
| Enbridge Inc (ENB) | 48 | $20.27 |
| Kinder Morgan (KMI) | 52 | $24.34 |
| Targa Resources (TRGP) | 49 | $157.50 |
| ONEOK (OKE) | 74 | $96.95 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Williams Companies rather than accepting ours.