Kinder Morgan, Inc. (KMI Quick QuoteKMI - Free Report) and Enterprise Products Partners LP (EPD Quick QuoteEPD - Free Report) are two leading midstream energy players, and hence, by virtue of their business model, are mostly insulated to extreme volatility in oil and natural gas prices. Over the past year, KMI has jumped 29.3%, outpacing EPD’s 16.4% gain. But, as we all know, that price movement is not the sole parameter in determining the investment objectives. Let’s examine the underlying fundamentals and the primary drivers of their business models.

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Kinder Morgan

Mounting LNG Demand Brightens Long-Term Business Outlook

Kinder Morgan is well-positioned to benefit from the growing demand for natural gas, both in the United States and globally. Notably, LNG exports are increasing in the United States, and with KMI responsible for transporting roughly 40% of all the gas to the liquefaction terminals, the company’s outlook appears promising.

KMI expects LNG demand worldwide to double by the end of this decade. This further brightens its outlook, considering it has a massive network of existing natural gas pipelines which is strategically located along the U.S. Gulf Coast, where the concentration of LNG facilities is high.

Expanding Backlog: Powering the Electricity Boom

The leading midstream energy company experienced a surge in its project backlog during the June quarter of 2025. The backlog grew to $9.3 billion from $8.8 billion, reflecting strong demand for its services and thereby securing incremental fee-based revenues. Thus, KMI will likely generate more cash flows for its shareholders.

In the June quarter, Kinder Morgan took on $1.3 billion in new projects, which is quite encouraging. Key developments include the Trident Phase 2 project and the Louisiana Line Texas Access project, both of which are designed to transport natural gas from Texas to Louisiana, a vital region for LNG (liquefied natural gas) exports. Interestingly, with the rising demand for LNG export, both long-term projects are backed by solid customer commitments, further reassuring incremental and reliable cash flows.

Interestingly, almost half of the backlog’s projects are aided by increasing power demand. With the rising need for electricity from the booming data centers and the growth in population, natural gas transportation and storage have become paramount, thereby enhancing Kinder Morgan’s business outlook.

Enterprise Products Partners

Robust Project Backlog: In-Service by 2026

The partnership has $6 billion worth of key projects under construction, with the maximum in-service date by the end of 2026. These include new gas processing plants in the Permian Basin, a major NGL pipeline (Bahia) and expansions at export terminals. Once all the projects come online, it will generate additional cash flows for the unit holders.

Competitive Advantage in Retaining & Attracting Customers

Enterprise Products’ extensive network of midstream assets handles large volumes of processing and transportation. This includes processing approximately 7.8 billion cubic feet of natural gas daily and transporting more than 1 million barrels of refined products and petrochemicals per day.

The partnership benefits from a strong competitive edge, as its midstream network is linked to all U.S. ethylene plants and nearly 90% of refineries located east of the Rockies, enabling it to attract and retain customers more effectively.

EPD vs. KMI: Which is a Better Stock?

Investors should also recognize that Enterprise Products’ balance sheet is stronger. This is because it will take three years of earnings for EPD to pay off its debt load compared to roughly five years for KMI. For Enterprise Products, the total debt to EBITDA is 3.33x, while for Kinder Morgan, it is 4.89x.

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Before concluding the investment analysis of both stocks, let’s have a quick look at the stocks’ fundamentals.

EPD: Steady Income & Investment Safety

Considering the extensive export network, comprising the Neches River terminal, which will be capable of loading up to 360,000 barrels of propane per day soon, Enterprise Products is well-positioned to deliver U.S. energy to global markets.

Along with this, the partnership’s project backlog, all of which will be online by next year-end, the midstream energy giant will continue to generate additional and steady cash flows for unit holders. Consequently, the incremental benefit for unitholders should be realized in the near term.

Also, the partnership, with a stronger balance sheet, will likely continue to generate a handsome distribution yield, which currently is at 6.88%.

Distribution Yield

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KMI: Growth With Risk

Although Kinder Morgan has a lower dividend yield and more debt, its fate is strongly tied to the LNG boom and U.S. gas demand growth. Thus, the company has a bit more risk as future LNG growth is highly sensitive to uncertainties like global politics and new tariffs.

Valuations

While EPD is currently trading at a trailing 12-month enterprise value-to-EBITDA (EV/EBITDA) of 10.21x, KMI is trading at a trailing 12-month EV/EBITDA of 13.68x.

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Investment Conclusions

Looking at the valuation, investors appear willing to pay a premium for KMI, likely accepting higher risks to capitalize on the LNG growth embedded in the midstream company’s business model.  Those who are willing to have a steady and high income can keep an eye on EPD.

Most importantly, investors should not rush to bet on either stock, as both midstream players have significant ongoing and planned capital projects that could face delays or cost overruns. However, those who have already invested either in EPD or KMI should retain the stocks. Currently, both EPD and KMI carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.