Will Kinder Morgan Continue to Outperform Its Peers?
Estimated 4Q16 net income
Kinder Morgan (KMI) is expected to report its 4Q16 earnings around January 18, 2017. Analysts expect a 27% rise in Kinder Morgan’s 4Q16 net income to $435 million from $343 million in 3Q16—a 10% increase compared to 3Q15.
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The above graph compares Kinder Morgan’s net income estimates with the adjusted net income over the last ten quarters. As the above graph shows, Kinder Morgan missed the net income estimates in four out of the last nine quarters.
Kinder Morgan rose 48% over the past year. In comparison, Enterprise Products Partners (EPD), ONEOK (OKE), and Enbridge Energy Partners (EEP) rose 14%, 151%, and 18%, respectively, during the same period. The Alerian MLP ETF (AMLP), an ETF of the top infrastructure MLPs, rose nearly 17%. So, Kinder Morgan stock outperformed the MLP sector over the past year.
Kinder Morgan announced a cash dividend of $0.13 per share for 3Q16—unchanged from the previous quarter. Kinder Morgan also announced expectations to declare dividends of $0.50 per share for 2016. It intends to “use cash in excess of dividend payments to fund growth investments and strengthen its balance sheet.” So, investors aren’t expecting a dividend increase this quarter.
In the company’s 3Q16 earnings release, Kinder Morgan’s president and CEO, Steve Kean, stated, “We continue to drive future growth by completing significant infrastructure development projects in our sizable project backlog. Our current project backlog is $13.0 billion, down from $13.5 billion at the end of the second quarter of 2016. This reduction was driven by the delivery of the Garden State and Bay State tankers as well as placing other projects in service. Excluding the CO2 segment projects, we expect the projects in our backlog to generate an average capital-to-EBITDA multiple of approximately 6.5 times.”