During the recent trading sessions stock of The Williams Companies, Inc. (NYSE:WMB) was gathering the crowd in the stock market. Many analysts use price trends and patterns to predict future performance, and we can glean some important insights about WMB by examining the chart.
How has the stock performed recently?
The Williams Companies, Inc. (NYSE:WMB) in the last month has increased +2.67%. Shares are now up +2.25% over the past year, underperforming the broad market by -87.02% and underperformed a peer group of similar companies by -36%. After the latest session, which saw the stock close at a price of $30.41, WMB sits -6.97% below its 52-week high. The Williams Companies, Inc. (NYSE:WMB) has been trading in a bearish manner, based on the relative positions of the stock’s 20 and 200 day moving averages.
Of course, these surface-level price movements don’t tell us much about the direction that WMB may be headed in the future. Fortunately, there is way to use the speed and magnitude of these price changes to predict future performance, thanks to what are known as momentum indicators. As momentum slows, it might be a sign that a support or resistance level has been reached, and that a trend is about to reverse. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for WMB is 54.47%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 86.13%, tells a different story, and suggests that WMB currently trades in overbought territory.
What do the trading volumes reveal?
Analysts use volume trends to assess the level of conviction behind a stock’s price changes. When volumes suddenly increase above normal levels, it can be a sign that investors feel very strongly in one way or the other about the future direction of a stock, or may even have access to inside information. The Williams Companies, Inc. (WMB) average trading volume of 3,911,640 during the past month is 44.38% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.
What do the analysts think?
WMB is currently undervalued by -11.21% relative to the average 1-year price target of $34.25 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 1.90, which implies that analysts are generally bullish in their outlook for WMB over the next year.
How risky is the stock?
Absolute price performance isn’t the only thing analysts consider when predicting future performance: volatility matters as well. Beta, which measures the stock’s volatility relative to the overall market, is a simple but effective metric for assessing risk.
The Williams Companies, Inc. (NYSE:WMB) has a beta of 1.38, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. WMB therefore has a above average level of market risk. During the past couple of weeks, WMB average daily volatility was 13.73%, which is 6.16 percentage points lower than the average volatility over the past 100 days.