uploads///Revenue Estimates

Kinder Morgan Misses 2Q15 Revenue and Earnings Estimates



Revenue versus consensus estimates

In the previous article, we analyzed Kinder Morgan’s (KMI) 2Q15 operating results. In this article, we’ll see how KMI’s 2Q15 revenue and earnings fared against analyst estimates. Let’s start with revenue.

Kinder Morgan missed its revenue estimates for the third consecutive quarter. The 2Q15 consensus estimate was ~$4.029 billion, while the firm’s actual revenue came in at $3.463 billion, a miss of 14.1%.

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Until 4Q14—the period before the effects of the now year-long rout in energy prices began to be felt—KMI beat revenue estimates for nine consecutive quarters. KMI’s 2Q15 revenue miss can be attributed to worse-than-expected performance in its Natural Gas Pipeline and CO2 segments. These two segments have significant exposure to commodity prices compared to its other segments. We’ll discuss this further when we analyze KMI’s operating performance by segment in a later article.

Adjusted EPS versus consensus estimates

Kinder Morgan missed its EPS (earnings per share) estimates for 2Q15 after meeting them in 1Q15. For 2Q15, the consensus estimate was ~$0.188, while adjusted EPS came in at $0.1750—a 6.9% miss.

Stock price reaction

KMI stock has fallen by ~7.3% since the earnings announcement on July 15, 2015. However, the revenue and EPS misses aren’t likely to be the sole reasons for KMI’s fall when you consider the company has grown its dividends and distributable cash flow even during the energy-price slump.

KMI has returned -17.4% since the beginning of this year. KMI peers Enterprise Product Partners (EPD), Williams Partners (WPZ), Enbridge Energy Partners (EEP), and Energy Transfer Partners (ETP) have returned -24.17%, 0.29%, -24.26%, and -22.71% year-to-date, respectively. This indicates a general weakness in the midstream energy sector.

Together, EPD, WPZ, EEP, and ETP account for ~28.99% of the Alerian MLP ETF (AMLP). KMI alone constitutes ~4.36% of the Energy Select Sector SPDR Fund (XLE).


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