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Kinder Morgan (KMI) Jumps 17.6% in Past Month: More Room Ahead?
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Kinder Morgan, Inc.’s (KMI - Free Report) shares have risen 17.6% in the past month compared with the industry’s 15.5% increase. While the overall energy sector is grappling with coronavirus woes, it has managed to navigate through the challenges. Headquartered in Houston, TX, the $32.6-billion company is a leading midstream energy infrastructure provider in North America.
It met earnings estimates thrice in the trailing four quarters and missed the same on another occasion. It continues to benefit from its massive network of natural gas pipelines.
Can It Retain Momentum?
The answer is yes and here’s why we think so:
Kinder Morgan has the largest network of natural gas pipelines in North America that spreads across almost 70,000 miles. Most importantly, the company’s midstream properties are linked to all the prospective plays in the United States that are rich in natural gas. These extensive networks of natural gas pipelines, in which the company has invested more than $32 billion to date, provide it with stable fee-based revenues. Also, it has 659 billion cubic feet of working storage capacity and operates 147 terminals. In fact, Kinder Morgan generates significant cash flow from the fees charged for using its midstream properties.
Kinder Morgan’s proposed Permian Highway Pipeline project is viewed as a game changer. The project — whose entire capacity is fully subscribed under long-term agreements — is anticipated to offer additional natural gas transportation capacity to the U.S. Gulf Coast. The $2.2-billion pipeline project, which will likely come online by early-2021, will transport daily natural gas volumes of roughly 2.1 billion cubic feet, and fetch the company stable and additional fees-based revenues.
With its diverse midstream infrastructure, Kinder Morgan is well positioned to capitalize on growing natural gas demand and rising liquefied natural gas export volumes on the back of strong clean energy demand. Moreover, it has brought the Movable Modular Liquefaction Unit 7 online under the Elba Liquefaction project. With this move, full commercial operations at the $2-billion Elba facility have kickstarted.
Despite coronavirus-induced depressed energy demand scenario, the Zacks Rank #3 (Hold) company continues to rely on its strong business model to raise annualized dividend payments to $1.25 per share in 2020. The midstream energy player will, however, consider the overall economic scenario while returning cash to stockholders and maintaining a strong balance sheet. It has a $2-billion share repurchase program, under which it has bought back $575 million worth of shares since December 2017.
What’s Holding the Stock Back?
There are some hiccups the company is currently facing. The decline in transported volumes of crude & condensate, along with refined products affected the Products Pipelines unit’s performance in the third quarter. A plunge in demand for refined products owing to the coronavirus pandemic was responsible for the underperformance. Considering current market uncertainty, things are not expected to improve anytime soon.
Moreover, the company produces and transports carbon dioxide, which is utilized for boosting the recovery and production of oil from mature fields. Notably, lower crude volumes and NGL prices hurt the company’s CO2 segment in the first nine months of 2020. As such, the segment’s EBDA decreased to $485 million from the year-ago comparable period's $522 million. As crude prices are not expected to recover to pre-pandemic level in the near term, the segment will likely keep losing profits.
Covanta Holding’s bottom line for 2021 is expected to rise 95.3% year over year.
Ameresco’s bottom line for 2020 is expected to rise 15.8% year over year.
Antero Midstream’s bottom line for 2020 has witnessed two upward estimate revisions and no downward movement in the past 60 days.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Kinder Morgan (KMI) Jumps 17.6% in Past Month: More Room Ahead?
Kinder Morgan, Inc.’s (KMI - Free Report) shares have risen 17.6% in the past month compared with the industry’s 15.5% increase. While the overall energy sector is grappling with coronavirus woes, it has managed to navigate through the challenges. Headquartered in Houston, TX, the $32.6-billion company is a leading midstream energy infrastructure provider in North America.
It met earnings estimates thrice in the trailing four quarters and missed the same on another occasion. It continues to benefit from its massive network of natural gas pipelines.
Can It Retain Momentum?
The answer is yes and here’s why we think so:
Kinder Morgan has the largest network of natural gas pipelines in North America that spreads across almost 70,000 miles. Most importantly, the company’s midstream properties are linked to all the prospective plays in the United States that are rich in natural gas. These extensive networks of natural gas pipelines, in which the company has invested more than $32 billion to date, provide it with stable fee-based revenues. Also, it has 659 billion cubic feet of working storage capacity and operates 147 terminals. In fact, Kinder Morgan generates significant cash flow from the fees charged for using its midstream properties.
Kinder Morgan’s proposed Permian Highway Pipeline project is viewed as a game changer. The project — whose entire capacity is fully subscribed under long-term agreements — is anticipated to offer additional natural gas transportation capacity to the U.S. Gulf Coast. The $2.2-billion pipeline project, which will likely come online by early-2021, will transport daily natural gas volumes of roughly 2.1 billion cubic feet, and fetch the company stable and additional fees-based revenues.
With its diverse midstream infrastructure, Kinder Morgan is well positioned to capitalize on growing natural gas demand and rising liquefied natural gas export volumes on the back of strong clean energy demand. Moreover, it has brought the Movable Modular Liquefaction Unit 7 online under the Elba Liquefaction project. With this move, full commercial operations at the $2-billion Elba facility have kickstarted.
Despite coronavirus-induced depressed energy demand scenario, the Zacks Rank #3 (Hold) company continues to rely on its strong business model to raise annualized dividend payments to $1.25 per share in 2020. The midstream energy player will, however, consider the overall economic scenario while returning cash to stockholders and maintaining a strong balance sheet. It has a $2-billion share repurchase program, under which it has bought back $575 million worth of shares since December 2017.
What’s Holding the Stock Back?
There are some hiccups the company is currently facing. The decline in transported volumes of crude & condensate, along with refined products affected the Products Pipelines unit’s performance in the third quarter. A plunge in demand for refined products owing to the coronavirus pandemic was responsible for the underperformance. Considering current market uncertainty, things are not expected to improve anytime soon.
Moreover, the company produces and transports carbon dioxide, which is utilized for boosting the recovery and production of oil from mature fields. Notably, lower crude volumes and NGL prices hurt the company’s CO2 segment in the first nine months of 2020. As such, the segment’s EBDA decreased to $485 million from the year-ago comparable period's $522 million. As crude prices are not expected to recover to pre-pandemic level in the near term, the segment will likely keep losing profits.
Stocks to Consider
Some better-ranked players in the energy space include Covanta Holding Corporation , Ameresco, Inc. (AMRC - Free Report) and Antero Midstream Corporation (AM - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Covanta Holding’s bottom line for 2021 is expected to rise 95.3% year over year.
Ameresco’s bottom line for 2020 is expected to rise 15.8% year over year.
Antero Midstream’s bottom line for 2020 has witnessed two upward estimate revisions and no downward movement in the past 60 days.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>