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Analyst Blog

Kinder Morgan Inc. (KMI - Analyst Report) reported second-quarter 2014 earnings of 27 cents a share from continuing operations, failing to meet the Zacks Consensus Estimate of 28 cents. However, the quarterly earnings remained unchanged from the year-earlier profit level.
 

 

Total revenue for the quarter increased 16.4% year over year to $3,937.0 million. The reported figure surpassed our expectation of $3,777.0 million.

Dividend

Kinder Morgan boosted its quarterly dividend to 43 cents a share ($1.72 per share annualized), up 8% from 40 cents ($1.60 per share annualized) paid in the second quarter of 2013.

For 2014, management expects a hike of 8% in declared cash distributions per unit from 2013.

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. .

Operational Highlights

Total expenses in the quarter were $2,924.0 million, representing a 12.0% increase from $2,610.0 million spent in the second quarter of 2013.

Operating income came in at $1,013.0 million, representing 31.2% growth from the comparable quarter a year ago. Operating margin was 25.7% compared with 22.8% in the year-ago quarter.

Financials

Cash available for dividend payments was $332.0 million in the reported quarter, reflecting an increase of 13% from $294.0 million in the comparable quarter last year. As of Jun 30, 2014 Kinder Morgan reported $50 million of cash and cash equivalents, while long-term debt was $8,088 million.

Our Take

Kinder Morgan is the largest midstream and the fourth largest energy company in North America. It owns an interest in or operates approximately 80,000 miles of pipelines and 180 terminals.

Going forward, we believe the company will offer ample scope for growth with approximately $17.0 billion in expansion and joint venture investments. The company also anticipates significant demand for natural gas transportation capacity to increase transportation commitments with customers. Since Dec 1, 2013, it has entered into approximately 3.5 billion cubic feet per day of new firm transportation commitments with customers for terms averaging about 15 years.

Kinder Morgan currently carries a Zacks Rank #2 (Buy). Another energy player worth considering is Niska Gas Storage Partners LLC (NKA - Snapshot Report) with a Zacks Rank #1 (Strong Buy)


 

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