Evaluating Williams Stock After 31% Return and Cash Flow Forecasts in 2025

If you are sizing up Williams Companies stock and wondering what your next move should be, you are not alone. Investors have been drawn in by a mix of solid performance and eye-catching numbers that can make even seasoned market-watchers pause and take a closer look. Over the past year, Williams Companies has delivered a total return of nearly 31%. If you zoom out further, the five-year return sits north of 250%. Those are head-turning figures, especially compared to many peers in the energy sector. In the short term, shares have seen mild swings, with a slight dip of just over 1% in the last week and month, and a more pronounced 3% slide in the last quarter.

This recent price action comes amid sector-wide volatility and shifting market sentiment. A major driver has been expectations around U.S. energy infrastructure demand, which have buoyed Williams’ outlook. While some analysts see the company as a steady, reliable performer, there has been an undercurrent of caution in valuation circles. On a pure numbers basis, Williams Companies clocks a valuation score of just 1 out of 6, indicating it only clears one undervalued checkmark among the standard tests. That is not the screaming deal value hunters daydream of, but it does not tell the whole story either.

Let’s unpack the different ways the market looks at Williams Companies’ valuation, and we will see why some of the usual metrics might be missing the full picture. By the end, I will share a perspective that could help you see the value others might overlook.

Williams Companies delivered 30.7% returns over the last year. See how this stacks up to the rest of the Oil and Gas industry.

Approach 1: Williams Companies Cash Flows

A Discounted Cash Flow (DCF) model estimates what a stock is truly worth by projecting the company’s future cash earnings and translating them into today’s dollars. This helps investors see whether the current price reflects the value of money Williams Companies will likely generate down the road.

Right now, Williams Companies reports a robust Free Cash Flow (FCF) of around $2.2 billion. Analysts expect this figure to grow steadily, projecting annual FCF to reach over $4.1 billion in ten years. Using a two-stage Free Cash Flow to Equity model, these future cash flows are discounted to account for time and risk. This results in an intrinsic value calculated at $61.01 per share.

Comparing this estimate to the current market price suggests that shares are trading at approximately a 6.5% discount to their calculated fair value. In other words, Williams Companies appears to be closely in line with its underlying value based on cash flows, suggesting neither a bargain nor an overhyped price at today’s levels.

Result: ABOUT RIGHT

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Williams Companies's DCF analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Williams Companies Price vs Earnings

For profitable companies like Williams Companies, the Price-to-Earnings (PE) ratio is a widely used valuation tool. This metric lets investors gauge how much they are paying for each dollar of earnings, providing a quick snapshot of whether a stock is expensive or a potential bargain. Generally, a higher PE ratio signals that the market expects stronger growth or sees the company as lower risk. In contrast, a lower PE may reflect slower growth expectations or higher uncertainty around future profits.

Williams Companies currently trades at a PE ratio of 28.7x. For context, the average for the Oil and Gas industry is 13.2x, and the peer group is around 14.8x. The market is pricing Williams well above its competitors, which may reflect confidence in its earnings stability and growth prospects.

Simply Wall St’s proprietary Fair Ratio, which takes into account the company’s expected growth, profitability, market size and risks, is 17.4x. Comparing this to the actual PE of 28.7x, there is a notable premium, suggesting the stock is more expensive than its fundamentals alone would justify. Investors should recognize this gap as a potential flag to be cautious about overpaying.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Williams Companies Narrative

A Narrative is your personal story or thesis about Williams Companies that connects what you believe about the business (such as its growth potential, relevant risks, and future margins) with a transparent financial forecast and an estimate of fair value. Rather than relying solely on standard metrics, Narratives help you place numbers in context by showing how different assumptions and perspectives can shape what the company is worth.

This approach grounds investment decisions both in data and in your unique insights, allowing you to visualize how Williams Companies' story unfolds financially within the Simply Wall St platform and its active investor community. Narratives make it simple to compare the calculated Fair Value from your story to the current market Price, helping you decide whether it is the right time to buy, sell, or hold.

Narratives update automatically with news, earnings, or industry developments, so you always see the latest picture. This applies not only to your own view but also to the range of perspectives shared by other investors. For Williams Companies, for example, some investors use optimistic forecasts and see a fair value as high as $74.00, while others emphasize risks and set their target at just $44.00.

Do you think there's more to the story for Williams Companies? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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