Kinder Morgan, Inc. KMI is a well-known name in the midstream energy space. The Zacks Consensus Estimate for its earnings for 2024 and 2025 is pegged at $1.17 and $1.23 per share, respectively, unchanged over the past seven days.
What’s Favoring KMI?
Kinder Morgan operates an extensive network of pipelines spanning 79,000 miles, transporting natural gas, gasoline, crude oil and carbon dioxide. The company also owns 139 terminals that store a variety of products, including renewable fuels, petroleum products, chemicals and vegetable oils.
Being a leading midstream service provider, Kinder Morgan’s pipeline and storage assets are secured under long-term take-or-pay contracts. These contracts ensure that shippers pay for the capacity reserved, whether they utilize it or not, which provides a steady stream of revenues. This structure allows Kinder Morgan to generate stable earnings insulated from fluctuations in the volume of natural gas transported, offering significant stability to its bottom line.
The demand for natural gas in the United States is anticipated to grow, backed by several important factors. As the nation shifts toward cleaner energy, natural gas is being increasingly utilized as a transitional fuel, given its cleaner-burning properties compared to coal and oil, which result in lower carbon emissions. Moreover, the rise in industrial activity and the growing demand for electricity, particularly from gas-powered plants, fuel this demand. Additionally, the expansion of natural gas exports as liquefied natural gas to satisfy global energy needs boosts domestic demand.
As a leading transporter of natural gas, Kinder Morgan, carrying a Zacks Rank #3 (Hold), is well-positioned to benefit from the growing demand for natural gas, which enhances its earnings. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In its preliminary 2025 financial projections, the leading midstream energy player emphasized its focus on achieving steady financial growth, increasing shareholder dividends and expanding operations, particularly in natural gas and energy transition projects.
Risks to Kinder Morgan’s Business
However, there has been a slowdown in drilling activities, as upstream players mainly focus on stockholder returns rather than boosting output. This could affect demand for midstream assets. Other midstream players that might also be adversely impacted include The Williams Companies Inc. WMB, Enterprise Products Partners LP EPD and Enbridge Inc. ENB.
Having ownership and operating interests in pipeline networks spanning 33,000 miles, The Williams Companies transports natural gas from the prolific basins in the United States to the end market.
Enterprise Products, a top-tier North American midstream service provider, boasts a vast and diversified asset portfolio. This includes more than 50,000 miles of pipelines and a storage capacity of 300 million barrels.
Enbridge is also a midstream energy player in North America, operating an extensive crude oil and liquids transportation network spanning 18,085 miles — the world's longest and most complex system.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
