Should You Include Kinder Morgan in Your Portfolio?
Kinder Morgan’s 4Q15 Earnings: Loss per Share, Lower Backlog
Analyst ratings for Kinder Morgan
In this article, we’ll look at what Wall Street analysts recommend for Kinder Morgan (KMI). At a broader level, ~52.6% of analysts rate Kinder Morgan a “buy,” ~42.1% rate it a “hold,” and ~5.3% rate it a “sell.”
The median broker target price of $18 for KMI implies a ~39.5% price return in the next 12 months from its January 20, 2016, closing price of 49.9%. KMI’s MLP peers EnLink Midstream Partners (ENLK) and Energy Transfer Partners (ETP) have “buy” ratings from 61.5% and 81.3% of analysts, respectively, and 61.5% of analysts rate Williams Partners (WPZ) a “hold.” KMI constitutes 3.9% of the First Trust North American Energy Infrastructure Fund (EMLP).
Outlook for Kinder Morgan
Investors can consider the following positives and negatives before they decide to include KMI as a long-term investment.
Positives
a five-year project backlog of $18.2 billion
KMI is expected to benefit from the rise in natural gas demand from power utilities in the long run
Negatives
KMI is highly leveraged with a debt-to-EBITDA multiple of 5.6x
with a recent dividend cut, KMI is no longer an attractive income opportunity
KMI is exposed to commodity prices through its CO2 and natural gas midstream businesses
out of KMI’s $18.2 billion five-year project backlog, $5.4 billion comes from the expansion of the Trans Mountain Pipeline System
the expansion project has been mired in regulatory hurdles for almost two years, and was recently opposed by the government of British Columbia on safety and environmental concerns
For more post-earnings coverage on midstream companies, check out our Master Limited Partnerships page.
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