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Kinder Morgan (KMI) Down 9% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Kinder Morgan (KMI - Free Report) . Shares have lost about 9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Kinder Morgan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Kinder Morgan Q2 Earnings Beat on Higher Gasoline Volumes
Kinder Morgan reported second-quarter 2021 adjusted earnings per share of 23 cents, beating the Zacks Consensus Estimate of 19 cents. The bottom line also increased from the year-ago profit of 17 cents per share.
Total revenues surged to $3,150 million from $2,560 million in the prior-year quarter and beat the Zacks Consensus Estimate of $2,959 million.
The strong quarterly results were aided by higher contribution from Texas intrastate systems and Hiland Midstream systems. Strong recovery in demand for refined products, as reflected in increased transported gasoline and jet volumes, contributed to the outperformance.
Segment Analysis
Natural Gas Pipelines: For the June quarter of 2021, adjusted earnings before depreciation, depletion and amortization expenses, including amortization of excess cost of equity investments (EBDA), rose to $1,064 million from $1,016 million a year ago. Increase in contributions Texas intrastate systems and Hiland Midstream systems primarily aided the segment. KinderHawk and Eagle Ford gathering and processing properties’ lower contributions offset the positives partially.
Products Pipelines: The segment’s EBDA for the second quarter was $293 million, reflecting a jump from $227 million a year ago. Recovery in demand for refined products, with the gradual reopening of economy, has aided the business unit.
Gasoline transported volumes increased more than 37% year over year in the June quarter, while jet fuel volumes skyrocketed 128.6%.
Terminals: Through this segment, Kinder Morgan generated quarterly EBDA of $246 million, up from the year-ago period’s $229 million. Improvement in volumes across the midstream player’s liquids network were responsible for the outperformance.
CO2: The segment’s EBDA was recorded at $151 million, down from $156 million a year ago. The underperformance was owing to a decline in CO2 sales and crude volumes.
Operational Highlights
Expenses related to operations and maintenance totaled $582 million, down from $606 million a year ago. Total operating costs increased to $3,914 million for the second quarter from $2,842 million in the corresponding period of 2020.
DCF
The company’s second-quarter distributable cash flow (DCF) was $1,025 million compared with $1,001 million a year ago.
Balance Sheet
As of Jun 30, 2021, Kinder Morgan reported $1,365 million in cash and cash equivalents. The company’s long-term debt amounted to $30,008 million at quarter-end, resulting in a debt to capitalization of 50.8%.
At second quarter-end, it had more than $3.9 billion of borrowing capacity left under the credit facility.
2021 Guidance
The company projects DCF and adjusted EBITDA for this year at $5.4 billion and $7.9 billion, respectively. The midstream firm revised its 2021 net income down to $1.7 billion from the prior range of $2.7 billion to $2.9 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 6.3% due to these changes.
VGM Scores
Currently, Kinder Morgan has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Kinder Morgan has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Kinder Morgan (KMI) Down 9% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Kinder Morgan (KMI - Free Report) . Shares have lost about 9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Kinder Morgan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Kinder Morgan Q2 Earnings Beat on Higher Gasoline Volumes
Kinder Morgan reported second-quarter 2021 adjusted earnings per share of 23 cents, beating the Zacks Consensus Estimate of 19 cents. The bottom line also increased from the year-ago profit of 17 cents per share.
Total revenues surged to $3,150 million from $2,560 million in the prior-year quarter and beat the Zacks Consensus Estimate of $2,959 million.
The strong quarterly results were aided by higher contribution from Texas intrastate systems and Hiland Midstream systems. Strong recovery in demand for refined products, as reflected in increased transported gasoline and jet volumes, contributed to the outperformance.
Segment Analysis
Natural Gas Pipelines: For the June quarter of 2021, adjusted earnings before depreciation, depletion and amortization expenses, including amortization of excess cost of equity investments (EBDA), rose to $1,064 million from $1,016 million a year ago. Increase in contributions Texas intrastate systems and Hiland Midstream systems primarily aided the segment. KinderHawk and Eagle Ford gathering and processing properties’ lower contributions offset the positives partially.
Products Pipelines: The segment’s EBDA for the second quarter was $293 million, reflecting a jump from $227 million a year ago. Recovery in demand for refined products, with the gradual reopening of economy, has aided the business unit.
Gasoline transported volumes increased more than 37% year over year in the June quarter, while jet fuel volumes skyrocketed 128.6%.
Terminals: Through this segment, Kinder Morgan generated quarterly EBDA of $246 million, up from the year-ago period’s $229 million. Improvement in volumes across the midstream player’s liquids network were responsible for the outperformance.
CO2: The segment’s EBDA was recorded at $151 million, down from $156 million a year ago. The underperformance was owing to a decline in CO2 sales and crude volumes.
Operational Highlights
Expenses related to operations and maintenance totaled $582 million, down from $606 million a year ago. Total operating costs increased to $3,914 million for the second quarter from $2,842 million in the corresponding period of 2020.
DCF
The company’s second-quarter distributable cash flow (DCF) was $1,025 million compared with $1,001 million a year ago.
Balance Sheet
As of Jun 30, 2021, Kinder Morgan reported $1,365 million in cash and cash equivalents. The company’s long-term debt amounted to $30,008 million at quarter-end, resulting in a debt to capitalization of 50.8%.
At second quarter-end, it had more than $3.9 billion of borrowing capacity left under the credit facility.
2021 Guidance
The company projects DCF and adjusted EBITDA for this year at $5.4 billion and $7.9 billion, respectively. The midstream firm revised its 2021 net income down to $1.7 billion from the prior range of $2.7 billion to $2.9 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 6.3% due to these changes.
VGM Scores
Currently, Kinder Morgan has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Kinder Morgan has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.