It has been about a month since the last earnings report for Kinder Morgan (KMI - Free Report) . Shares have added about 5.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Kinder Morgan due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Kinder Morgan Q1 Earnings In Line, Revenues Miss Estimates
Kinder Morganposted first-quarter 2019 adjusted earnings of 25 cents per share, in line with the Zacks Consensus Estimate and up almost 14% from the year-ago quarter’s 22 cents.
Total revenues increased nominally year over year to $3,429 million. However, the top line lagged the Zacks Consensus Estimate of $3,644 million.
Higher transported natural gas volumes along with liquids business strength primarily supported first-quarter 2019 results. This was negated partially by Kinder Morgan Crude & Condensate pipeline’s lower contributions.
Although the company announced strong first-quarter earnings along with dividend hikes, investors were disappointed with the midstream energy firm’s projection for below-budget 2019 EBITDA.
Kinder Morgan received an approval from its board of directors to increase quarterly dividend. The dividend for the March quarter of 2019 came at 25 cents per share, representing a sequential hike of 25%. The increased dividend is likely to be paid on May 15, to stockholders of record as of Apr 30.
Natural Gas Pipelines: Earnings before depreciation, depletion and amortization expenses, including amortization of excess cost of equity investments (EBDA), before certain items, in the segment was up 12% year over year from $1,074 million to $1,201 million. Higher transported volumes of natural gas, backed by rising production in the Permian and DJ basins, primarily enhanced the segment’s performance.
Products Pipelines: The segment’s EBDA, before certain items, for the March quarter of 2019 was reported at $293 million, representing a decline of 1% from $297 million a year ago. This was due to Kinder Morgan Crude & Condensate pipeline’s lower contributions.
Terminals: Through this segment, Kinder Morgan generated quarterly EBDA of $299 million, up a nominal 1% from the year-ago period, thanks to strength in its liquids business.
CO2: The segment’s EBDA declined 20% to $189 million from $237 million a year ago.
Expenses related to operations and maintenance totaled $598 million, down 3.4% from $619 million a year ago.
Operating income amounted to $1,018 million, up 7.3% from the year-ago quarter’s figure.
The company’s first-quarter distributable cash flow increased to $1,371 million from $1,247 million a year ago. The company had a project backlog of $6.1 billion at the end of the quarter.
As of Mar 31, 2019, Kinder Morgan reported $221 million in cash and cash equivalents. The company’s long-term debt amounted to $32,368 million at quarter-end. Total debt-to-capitalization ratio at the end of the first quarter was 50.3%.
Kinder Morgan expects 2019 dividend of $1.00 per common share. The company also projects adjusted EBITDA and DCF for 2019 at $7.8 billion and $5 billion, respectively. However, Kinder Morgan added that its adjusted EBITDA for 2019 could be marginally below budget, owing to which the firm’s 2019 net debt-to-adjusted EBITDA ratio is expected at 4.6X. Nevertheless, the midstream energy firm assured investors that the net debt-to-adjusted EBITDA ratio will be almost in line with long-term goal of 4.5X.
For 2019, the company expects to spend $3.1 billion on growth developments.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
At this time, Kinder Morgan has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Kinder Morgan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.