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Kinder Morgan Misses 3Q15 Revenue and Earnings Estimates


Oct. 26 2015, Published 1:40 p.m. ET

Kinder Morgan’s revenue versus consensus estimates

In the previous article, we analyzed Kinder Morgan’s (KMI) 3Q15 operating results. In this article, we’ll see how Kinder Morgan’s 3Q15 revenue and earnings fared against Wall Street analysts’ estimates. Let’s start with revenue.

Kinder Morgan missed its revenue estimates for the fourth consecutive quarter. The 3Q15 consensus estimate was ~$3.8 billion, while the company’s actual revenue stood at $3.7 billion, a miss of 2.0%.

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Kinder Morgan’s 3Q15 revenue miss can be attributed to lower-than-expected performance from its Natural Gas Pipelines and CO2 segments. These two segments have significant commodity price exposure. We’ll discuss more on this when we’ll analyze Kinder Morgan’s segment-by-segment operating performance in a later article.

Kinder Morgan’s adjusted EPS versus consensus estimates

Similar to its revenue, Kinder Morgan missed all its EPS (earnings per share) estimates since the rout in energy prices. For 3Q15, the consensus estimate was ~$0.181 while adjusted EPS stood at $0.158, a miss of 12.7%.

Kinder Morgan’s peers Spectra Energy Partners (SEP), Oneok Partners (OKS), and Energy Transfer Partners (ETP) beat their 3Q15 EPS estimates by 23.7%, 22.6%, and 23.8%, respectively.

This may indicate Kinder Morgan’s significant commodity exposure and higher interest expense compared to those of the few large midstream MLPs. Kinder Morgan constitutes ~0.53% of the iShares Russell 1000 Value ETF (IWD).

Kinder Morgan’s stock price reaction

Kinder Morgan shares fell ~7.0% after its earnings announcement on October 21, 2015. However, revenue and EPS misses should not be the sole reasons for Kinder Morgan’s fall, as the company has grown its dividends and distributable cash flows. We’ll try to find out the other possible reasons for this fall in later articles.


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