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What???s in Store for Kinder Morgan (KMI) in Q1 Earnings?
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Midstream energy assets operator, Kinder Morgan, Inc. (KMI - Free Report) is expected to report first-quarter 2017 earnings on Apr 19, after the closing bell.
Last quarter, the company’s earnings of 19 cents per share beat the Zacks Consensus Estimate of 18 cents but decreased from 27 cents reported a year ago. Investors should note that the company outpaced the Zacks Consensus Estimate in three of the last four quarters. Let’s see how things are shaping up prior to the announcement.
Kinder Morgan’s consistent efforts to reduce costs and restrict capital expenditures to only projects that offer high returns should improve margins as well as partly offset the impact of the low commodity price environment.
Kinder Morgan is one of the largest midstream companies in North America. The company’s size should prove to be advantageous with opportunities to build smaller adjacent pipelines at a lower cost than its peers. Further, an increased demand for power generation and exports are expected to drive continued infrastructure build-out for the company in the coming quarters. We expect these factors to aid the company’s first-quarter results as well.
However, gas infrastructure opportunities are limited to the near-to-medium term. This is mainly due to low basis differentials and reduced dry gas drilling. The only positive we see for natural gas infrastructure is the Marcellus shale development. In the last six months, shares of Kinder Morgan gained 6%, while the Zacks categorized sub industry Oil & Gas-Production/Pipeline industry registered an increase of 3.1%.
Moreover, we are concerned about Kinder Morgan's high debt levels, which makes the company vulnerable to an extended downturn. As of Dec 31, 2016, Kinder Morgan had total debt of over $36 billion.
Earnings Whispers
Our proven model does not conclusively show that Kinder Morgan is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -5.56%. This is because the Most Accurate estimate is pegged at 17 cents, while the Zacks Consensus Estimate for the company stands at 18 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Kinder Morgan carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative Earnings ESP makes surprise prediction difficult.
Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Though an earnings beat looks uncertain for Kinder Morgan, here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat this quarter:
Chesapeake Energy Corp. (CHK - Free Report) has an Earnings ESP of +15.79% and a Zacks Rank #3. The company is expected to release earnings on May 4.
Rowan Companies plc has an Earnings ESP of +61.54% and a Zacks Rank #3. The company is expected to release earnings on May 2.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
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What???s in Store for Kinder Morgan (KMI) in Q1 Earnings?
Midstream energy assets operator, Kinder Morgan, Inc. (KMI - Free Report) is expected to report first-quarter 2017 earnings on Apr 19, after the closing bell.
Last quarter, the company’s earnings of 19 cents per share beat the Zacks Consensus Estimate of 18 cents but decreased from 27 cents reported a year ago. Investors should note that the company outpaced the Zacks Consensus Estimate in three of the last four quarters. Let’s see how things are shaping up prior to the announcement.
Kinder Morgan, Inc. Price and EPS Surprise
Kinder Morgan, Inc. Price and EPS Surprise | Kinder Morgan, Inc. Quote
Factors to Consider
Kinder Morgan’s consistent efforts to reduce costs and restrict capital expenditures to only projects that offer high returns should improve margins as well as partly offset the impact of the low commodity price environment.
Kinder Morgan is one of the largest midstream companies in North America. The company’s size should prove to be advantageous with opportunities to build smaller adjacent pipelines at a lower cost than its peers. Further, an increased demand for power generation and exports are expected to drive continued infrastructure build-out for the company in the coming quarters. We expect these factors to aid the company’s first-quarter results as well.
However, gas infrastructure opportunities are limited to the near-to-medium term. This is mainly due to low basis differentials and reduced dry gas drilling. The only positive we see for natural gas infrastructure is the Marcellus shale development. In the last six months, shares of Kinder Morgan gained 6%, while the Zacks categorized sub industry Oil & Gas-Production/Pipeline industry registered an increase of 3.1%.
Moreover, we are concerned about Kinder Morgan's high debt levels, which makes the company vulnerable to an extended downturn. As of Dec 31, 2016, Kinder Morgan had total debt of over $36 billion.
Earnings Whispers
Our proven model does not conclusively show that Kinder Morgan is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -5.56%. This is because the Most Accurate estimate is pegged at 17 cents, while the Zacks Consensus Estimate for the company stands at 18 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Kinder Morgan carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative Earnings ESP makes surprise prediction difficult.
Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Though an earnings beat looks uncertain for Kinder Morgan, here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat this quarter:
Antero Resources Corporation (AR - Free Report) has an Earnings ESP of +100.00% and a Zacks Rank #1. The company is expected to release earnings on Apr 26. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chesapeake Energy Corp. (CHK - Free Report) has an Earnings ESP of +15.79% and a Zacks Rank #3. The company is expected to release earnings on May 4.
Rowan Companies plc has an Earnings ESP of +61.54% and a Zacks Rank #3. The company is expected to release earnings on May 2.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
See today's Zacks "Strong Sells" absolutely free >>