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Is a Beat Likely for Kinder Morgan (KMI) in Q4 Earnings?

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Kinder Morgan, Inc. KMI is scheduled to report fourth-quarter 2019 earnings on Jan 22.  

The energy infrastructure company’s earnings missed the Zacks Consensus Estimate only once and met the same thrice in the trailing four quarters, with the average negative surprise being 1.1%. This is depicted in the graph below:

Kinder Morgan, Inc. Price and EPS Surprise

Kinder Morgan, Inc. Price and EPS Surprise

Kinder Morgan, Inc. price-eps-surprise | Kinder Morgan, Inc. Quote

Let’s see how things have shaped up prior to this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings per share of 26 cents has witnessed two upward and downward revisions each over the past seven days. The estimated figure suggests an improvement of 4% from the prior-year reported number.

The consensus estimate for fourth-quarter revenues of $3.7 billion indicates a 1.5% decline from the year-ago reported figure.

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for Kinder Morgan this time around. This is because it has the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Kinder Morgan has an Earnings ESP of +0.80%. This is because the Most Accurate Estimate for the quarter is currently pegged higher than the Zacks Consensus Estimate of 26 cents per share.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Kinder Morgan carries a Zacks Rank #3.

Factors Driving the Better-Than-Expected Earnings

Owing to sturdy demand for natural gas transportation assets, the midstream company is expected to have generated steady fee-based revenues in the to-be-reported quarter.

Increased hydrocarbon production boosted the country’s exports in the last few quarters, which further drove the company’s earnings capabilities. Its fourth-quarter results will likely reflect this upside potential. Notably, the company brought the Gulf Coast Express Pipeline Project online on Sep 25, 2019. The 2-billion cubic feet per day pipeline is expected to have boosted its fourth-quarter profits.

Markedly, Kinder Morgan generates bulk of fee-based revenues from refined products and liquid pipelines. With buoyant demand for refined products on the domestic and international front, the company’s refined product pipelines are expected to have reaped robust profits in the quarter to be reported. Notably, the Zacks Consensus Estimate for net NGL sales volumes is pegged at 10.12 thousand barrels per day (MBbl/d), indicating an increase from the year-ago level of 9.38 (MBbl/d).

Other Stocks to Consider

Some other energy stocks with the perfect mix of elements to beat on earnings in the upcoming quarterly release are:

ConocoPhillips (COP - Free Report) has an Earnings ESP of +1.27% and a Zacks Rank of 2. The company is slated to announce fourth-quarter 2019 earnings on Feb 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Baker Hughes Co. BKR is set to report fourth-quarter 2019 earnings on Jan 22. The stock has an Earnings ESP of +1.64% and is a Zacks #3 Ranked player.

Viper Energy Partners LP VNOM has an Earnings ESP of +33.05% and holds a Zacks Rank #3. The company is scheduled to release fourth-quarter 2019 earnings on Feb 11.

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