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Kinder Morgan’s 3Q15 EPS Estimate Is the Lowest in Last 12 Quarters

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Oct. 13 2015, Updated 1:07 p.m. ET

Kinder Morgan’s 3Q15 EPS estimates

Wall Street analysts’ 3Q15 consensus EPS (earnings per share) estimate for Kinder Morgan (KMI) is ~$0.186, similar to the ~$0.188 they estimated in the previous quarter.

The 3Q15 EPS estimate is the lowest compared to estimates for the last 12 quarters, which could be a result of the following factors:

  • As discussed in the previous article, KMI’s CO2-based enhanced crude oil recovery and natural gas midstream businesses are exposed to commodity prices. Since prices have not recovered substantially, KMI’s earnings might be negatively impacted. Average crude oil prices by the end of September 2015 were ~$45.5 a barrel as compared to ~$59.8 a barrel in June. Similarly, average natural gas prices have come down from $2.78 per MMBtu (British thermal units in millions) in June to $2.66 per MMBtu in September.
  • Lower earnings during the third quarter are due to lower natural gas and NGL (natural gas liquids) demand.
  • Increased interest costs resulted from the company’s February 2015 Hiland Partners acquisition.
  • Increased G&A (general and administrative) expenses resulted from the Hiland acquisition. KMI expects G&A expenses to be 4% above its 2015 budget.
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Kinder Morgan’s adjusted earnings versus consensus estimates

The 2Q15 EPS estimate for KMI was ~$0.188 while the adjusted EPS was ~$0.16, a ~14.6% miss. We’ll look at whether KMI beats or misses its 3Q15 EPS estimates in our post earnings series for KMI in a couple of weeks. KMI is the largest holding of the First Trust North American Energy Infrastructure Fund (EMLP). It alone constitutes 9% of EMLP.

Peer comparison

KMI’s MLP peer Enbridge Energy Partners (EEP) missed its 2Q15 EPS estimate by 24.3% while Energy Transfer Partners (ETP) and Spectra Energy Partners (SEP) beat their 2Q EPS estimates by 23.8% and 47.4%, respectively. Spectra Energy (SE) and Enbridge (ENB) own the general partner of SEP and EEP, respectively.

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