Is Kinder Morgan Trading at an Attractive Valuation?
Kinder Morgan’s fall
Kinder Morgan (KMI) stock is down 20% year-to-date. It’s currently trading 4% below its 50-day moving average and 11% below its 200-day moving average. Kinder Morgan’s 200-day moving average may act as a resistance for the stock in the near term. Let’s see if it looks attractive after the fall so far.
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Kinder Morgan stock is currently trading at a forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 10.6x, which is lower than its five-year average multiple of 15.3x. Over a four-year period, the average falls to 13.3x. Even compared to the four-year average, the stock seems to be trading at a fair discount. The above graph shows KMI’s forward EV-to-EBITDA multiple over the last four years.
Comparison with peers
Enterprise Products Partners (EPD) is trading at a forward EV-to-EBITDA multiple of 12.9x. EPD is also trading at a lower multiple than its five-year average of 14.6x. Targa Resources (TRGP) and ONEOK (OKE) are trading at multiples of 11.7x and 13.3x, respectively. The current multiples for both TRGP and OKE are slightly higher than their respective five-year averages. Notably, KMI’s forward EV-to-EBITDA multiple is lower compared to the selected midstream peers as well.
To learn how short interest in Kinder Morgan changed recently, read Why Short Interest in Kinder Morgan Fell 4.3% Recently. To know about institutional investor activity in KMI in 3Q17, read Top Institutional Investors Added to Their KMI Positions in 3Q17.