It has been about a month since the last earnings report for Kinder Morgan (KMI). Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Kinder Morgan due for a breakout? 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 Reports In-Line Q4 Earnings Estimates
Kinder Morgan reported fourth-quarter 2022 adjusted earnings per share of 31 cents, in line with the Zacks Consensus Estimate. The bottom line increased from the year-ago quarter’s 27 cents per share.
Total quarterly revenues of $4,579 million missed the Zacks Consensus Estimate of $5,527 million. The top line, however, surged from $4,425 million in the prior-year quarter.
The in-line quarterly earnings were primarily aided by higher gathering and transport volumes. Lower contributions from Product Pipelines offset the positives.
Segmental Analysis
Natural Gas Pipelines: In the December quarter of 2022, adjusted earnings before depreciation, depletion and amortization expenses, including the amortization of the excess cost of equity investments (EBDA), rose to $1,353 million from $1,215 million a year ago. Higher gathering and transport volumes primarily aided the segment.
Product Pipelines: The segment’s EBDA in the fourth quarter was $252 million, reflecting a decline from $281 million a year ago. Lower volumes of gasoline and diesel fuel affected the segment.
Gasoline transported volumes decreased 2% year over year in the December quarter but jet fuel volumes jumped 9.8%.
Terminals: Through the segment, Kinder Morgan generated quarterly EBDA of $244 million, flat with the year-ago period’s number. Sustained strength in handling rates primarily aided the unit.
CO2: The segment’s EBDA was recorded at $194 million, up from the year-ago quarter’s figure of $158 million. The outperformance was caused by increased realized prices of crude, NGL and CO2.
Operational Highlights
Expenses related to operations and maintenance totaled $695 million, up from $658 million a year ago. Total operating costs expenses and other were flat at $3,475 million.
Distributable Cash Flow (DCF)
Kinder Morgan’s fourth-quarter DCF was $1,217 million compared with $1,093 million a year ago.
Balance Sheet
As of Dec 31, 2022, Kinder Morgan reported $745 million in cash and cash equivalents. The company’s long-term debt amounted to $28,288 million at the quarter-end.
Outlook
For 2023, KMI projects a net income attributable to the midstream player of $2.5 billion. For this year, it expects a dividend of $1.13 per share, suggesting an increase of 2% from the prior-year reported figure.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Kinder Morgan has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Kinder Morgan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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