In this article, we’ll look at what Wall Street analysts recommend for Kinder Morgan (KMI). At a broader level, ~81.8% of analysts rate Kinder Morgan a “buy,” ~13.6% rate it a “hold,” and ~4.5% rate it a “sell.”
The median broker target price of $47 for KMI implies a ~34.9% price return in the next 12 months. KMI peers Williams Partners (WPZ), Enterprise Product Partners (EPD), and Energy Transfer Partners (ETP) have “buy” ratings from 50%, 89.7%, and 75% of analysts, respectively. Among analysts, 58.8% rate Spectra Energy Partners (SEP) a “hold.”
Together, WPZ, ETP, EPD, and SEP account for ~26.59% of the Alerian MLP ETF (AMLP). AMLP is made up of 25 midstream energy MLPs. KMI alone constitutes ~4.36% of the Energy Select Sector SPDR Fund (XLE).
Even though KMI missed its 2Q15 earnings and revenues estimates—as discussed in Part 2—this shouldn’t affect KMI’s overall long-term outlook. Investors should consider the following positives and negatives before they decide to include KMI in their portfolio.
- KMI is a toll-road-like business with limited exposure to commodity prices
- five-year project backlog of $22 billion
- expected dividend growth of 10% per year through 2020
- elimination of MLP structure leaving room to manage liquidity and cash flow during tough times
- high growth, which is difficult for a company of KMI’s size to maintain in the long run
- KMI is the third-largest energy company in the US since its 2014 consolidation with its subsidiaries
- out of the $22 billion five-year project backlog, $5.4 billion comes from the expansion of the Trans Mountain Pipeline System, mired in regulatory hurdles for some time now
For more earnings release coverage on midstream companies, check out our Midstream Oil and Gas page.