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Analyst Blog

Kinder Morgan Inc. (KMI - Analyst Report) reported second quarter 2013 earnings of 27 cents a share from continuing operations, failing to meet the Zacks Consensus Estimate of 31 cents. Also, the quarterly earnings decreased from the year-earlier profit level of 36 cents.
 
Total revenue for the quarter increased 55.8% year over year to $3.38 billion. The reported figure also surpassed our expectation of $3.17 billion.

Dividend

Kinder Morgan boosted its quarterly dividend by 14% to 40 cents a share ($1.60 per share annualized) from 35 cents ($1.40 per share annualized) paid in the second quarter of 2012.

For 2013, management expects a hike of 18% in declared cash distributions per unit from 2012.

The company’s growth curve will be driven by its ownership of the general partners of Kinder Morgan Energy Partners, L.P. and El Paso Pipeline Partners, L.P. . The natural gas assets acquired by Kinder Morgan through the El Paso Corporation will further augment dividend payments.

Operational Highlights

Total expenses in the quarter were $2.61 billion, representing a 36.7% increase from $1.91 billion spent in the second quarter of 2012.

Operating income came in at $775.0 million versus $260.0 million in the year-ago quarter. Operating margin was 22.9% compared with approximately 12.0% in the year-ago quarter.

Financials

Cash available for dividend payments was $294.0 million in the second quarter of 2013, an decrease of 4.2% from $307.0 million in the comparable quarter last year. As of Jun 30, 2013 Kinder Morgan reported $141.0 million of cash and cash equivalents, while long-term debt was $7.73 billion.

Ranks

Kinder Morgan holds a Zacks Rank #3 (Hold). There are other stocks in the oil and gas industry, like Zacks Rank #1 (Strong Buy) Cheniere Energy Partners LP. (CQP - Snapshot Report), which appear more promising.