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Here's Why You Should Hold on to Kinder Morgan (KMI) Stock
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Kinder Morgan, Inc. (KMI - Free Report) has seen upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
The Zacks Consensus Estimate for KMI’ 2024 and 2025 earnings per share (EPS) is pegged at $1.17 and $1.21, respectively.
What’s Favoring the Stock?
Stable Dividend Growth: KMI’s recent dividend increase to 28.25 cents per share in fourth-quarter 2023, representing 2% year-over-year growth, underscores its commitment to returning value to shareholders. This consistent dividend policy, combined with a forecast of $1.15 per share for 2024, signals financial stability and a shareholder-friendly approach. Its 2024 dividend expectations are set at $1.15 per share, maintaining a robust coverage ratio.
Strategic Acquisitions and Expansions: The acquisition of STX Midstream for $1.8 billion enhances KMI’s asset base and integration within its existing infrastructure, particularly in natural gas transport to the Mexico and Gulf Coast markets. The acquisition, completed at the end of 2023, brings large-diameter, high-pressure pipeline systems into KMI’s portfolio, with an average contract length of more than eight years, predominantly supported by take-or-pay contracts.
Energy Transition Initiatives: Investment in energy transition projects, such as renewable natural gas (RNG) and sustainable aviation fuel, aligns the company with evolving energy market dynamics and sustainability trends, potentially unlocking new revenue streams. KMI’s energy transition ventures, including a RNG generation capacity of 6.1 billion cubic feet per year and planned expansions, highlight its strategic pivot toward lower-carbon energy solutions.
Resilient Financial Performance: Despite a challenging economic environment with increased interest expenses and commodity price volatility, KMI reported stable financial results, with a net income of $2.4 billion and adjusted EBITDA of $7.6 billion in 2023. The company anticipates EPS of $1.22 and DCF per share of $2.26 for 2024, suggesting 15% and 8% increases, respectively, from the previous year’s actuals.
Risks:
High Debt Levels: Kinder Morgan ended fourth-quarter 2023 with a net-debt-to-adjusted-EBITDA ratio of 4.2, a slight increase from the previous periods, influenced by the $1.8-billion acquisition of STX Midstream. While KMI acknowledges this to be within its expectations, high leverage remains concerning. This metric is critical as it shows the company’s debt level in relation to its earnings before interest, taxes, depreciation and amortization.
Stocks to Consider
Kinder Morgan currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked companies mentioned below. Each of these three companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Global Partners (GLP - Free Report) is a leading operator of gasoline stations and convenience stores. Over the past 30 days, GLP has witnessed upward earnings estimate revisions for 2023 and 2024, respectively.
The Zacks Consensus Estimate for Global Partners’ 2024 and 2025 earnings per share (EPS) is pegged at $3.90 and $4.47, respectively. GLP currently has a Zacks Style Score of A for Value.
Murphy USA Inc. (MUSA - Free Report) is a leading independent retailer of motor fuel and convenience merchandise in the United States.
The Zacks Consensus Estimate for MUSA’s 2024 and 2025 EPS is pegged at $26.32 and $27.94, respectively. The company has a Zacks Style Score of B for Value, Growth and Momentum. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Marathon Petroleum Corporation (MPC - Free Report) is a leading independent refiner, transporter and marketer of petroleum products. With a 10% increase in the quarterly dividend and a total shareholder return of 31% in 2023, MPC's strong through-cycle cash generation positions it as an attractive investment for those seeking consistent returns.
The Zacks Consensus Estimate for MPC’s 2024 and 2025 EPS is pegged at $15.82 and $14.30, respectively. The company has a Zacks Style Score of A for Value and Momentum, and B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
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Here's Why You Should Hold on to Kinder Morgan (KMI) Stock
Kinder Morgan, Inc. (KMI - Free Report) has seen upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
The Zacks Consensus Estimate for KMI’ 2024 and 2025 earnings per share (EPS) is pegged at $1.17 and $1.21, respectively.
What’s Favoring the Stock?
Stable Dividend Growth: KMI’s recent dividend increase to 28.25 cents per share in fourth-quarter 2023, representing 2% year-over-year growth, underscores its commitment to returning value to shareholders. This consistent dividend policy, combined with a forecast of $1.15 per share for 2024, signals financial stability and a shareholder-friendly approach. Its 2024 dividend expectations are set at $1.15 per share, maintaining a robust coverage ratio.
Strategic Acquisitions and Expansions: The acquisition of STX Midstream for $1.8 billion enhances KMI’s asset base and integration within its existing infrastructure, particularly in natural gas transport to the Mexico and Gulf Coast markets. The acquisition, completed at the end of 2023, brings large-diameter, high-pressure pipeline systems into KMI’s portfolio, with an average contract length of more than eight years, predominantly supported by take-or-pay contracts.
Energy Transition Initiatives: Investment in energy transition projects, such as renewable natural gas (RNG) and sustainable aviation fuel, aligns the company with evolving energy market dynamics and sustainability trends, potentially unlocking new revenue streams. KMI’s energy transition ventures, including a RNG generation capacity of 6.1 billion cubic feet per year and planned expansions, highlight its strategic pivot toward lower-carbon energy solutions.
Resilient Financial Performance: Despite a challenging economic environment with increased interest expenses and commodity price volatility, KMI reported stable financial results, with a net income of $2.4 billion and adjusted EBITDA of $7.6 billion in 2023. The company anticipates EPS of $1.22 and DCF per share of $2.26 for 2024, suggesting 15% and 8% increases, respectively, from the previous year’s actuals.
Risks:
High Debt Levels: Kinder Morgan ended fourth-quarter 2023 with a net-debt-to-adjusted-EBITDA ratio of 4.2, a slight increase from the previous periods, influenced by the $1.8-billion acquisition of STX Midstream. While KMI acknowledges this to be within its expectations, high leverage remains concerning. This metric is critical as it shows the company’s debt level in relation to its earnings before interest, taxes, depreciation and amortization.
Stocks to Consider
Kinder Morgan currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked companies mentioned below. Each of these three companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Global Partners (GLP - Free Report) is a leading operator of gasoline stations and convenience stores. Over the past 30 days, GLP has witnessed upward earnings estimate revisions for 2023 and 2024, respectively.
The Zacks Consensus Estimate for Global Partners’ 2024 and 2025 earnings per share (EPS) is pegged at $3.90 and $4.47, respectively. GLP currently has a Zacks Style Score of A for Value.
Murphy USA Inc. (MUSA - Free Report) is a leading independent retailer of motor fuel and convenience merchandise in the United States.
The Zacks Consensus Estimate for MUSA’s 2024 and 2025 EPS is pegged at $26.32 and $27.94, respectively. The company has a Zacks Style Score of B for Value, Growth and Momentum. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Marathon Petroleum Corporation (MPC - Free Report) is a leading independent refiner, transporter and marketer of petroleum products. With a 10% increase in the quarterly dividend and a total shareholder return of 31% in 2023, MPC's strong through-cycle cash generation positions it as an attractive investment for those seeking consistent returns.
The Zacks Consensus Estimate for MPC’s 2024 and 2025 EPS is pegged at $15.82 and $14.30, respectively. The company has a Zacks Style Score of A for Value and Momentum, and B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.