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Why Kinder Morgan’s 2Q15 Earnings per Share Estimate Is Low Again



2Q15 earnings per share estimate

Kinder Morgan (KMI) beat analysts’ EPS (earnings per share) estimates in 1Q15. But Wall Street analysts lowered their 2Q15 EPS estimates to ~$0.191 compared to the ~$0.216 they estimated in 1Q15. That’s a decrease of ~11.6%.

The 2Q15 EPS estimate is the lowest of the last 12 quarters. The lower estimate could be attributable to the following:

  • KMI’s CO2-based enhanced crude oil recovery and natural gas midstream businesses are exposed to commodity prices. Since prices haven’t recovered substantially, KMI’s earnings might be negatively impacted.
  • Lower earnings during the second and third quarters could be due to lower demands for natural gas and NGLs (natural gas liquids).
  • Interest costs have increased due to KMI’s February 2015 Hiland Partners acquisition.
  • G&A (general and administrative) expenses have increased as a result of the Hiland acquisition. KMI expects G&A expenses to be 4% above the 2015 budget.
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Adjusted earnings versus consensus estimates

The 1Q15 EPS estimate for KMI was ~$0.216, while the adjusted EPS was ~$0.232, a ~7.6% beat. We’ll have to wait for the 2Q15 earnings release to see whether KMI beats or misses its 2Q15 EPS estimates. We’ll cover this in our post-earnings series for KMI next month.

Peer comparison

KMI’s C corporation peer Spectra Energy Corp (SE) missed its 1Q15 EPS estimate by 2.73%. The Williams Companies (WMB) met its 1Q15 EPS estimates. WMB’s adjusted EPS was ~11.3% greater than consensus estimates. KMI’s MLP peers Sunoco Logistics Partners (SXL), Energy Transfer Partners (ETP), and Enterprise Products Partners (EPD) missed their 1Q15 EPS estimates by 133.7%, 66.9%, and 0.7%, respectively. KMI, WMB, and SE together make up 9.4% of the Energy Select Sector SPDR Fund (XLE).


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