9 Jan

What Are Analysts’ Recommendations for Kinder Morgan?

WRITTEN BY Rekha Khandelwal, CFA

Analyst recommendations

Of the analysts surveyed by Reuters, ~66.7% rated Kinder Morgan (KMI) as a “buy” and ~33.3% rated it as a “hold.” None of the surveyed analysts rated it as a “sell.” The consensus target price for Kinder Morgan is $25.0. Currently, its units are trading at $21.8. If the company attains this target price within a year, it would mean a 15% price return for investors.

What Are Analysts’ Recommendations for Kinder Morgan?

As for its peers, 40% of analysts rated Targa Resources (TRGP) as a “buy,” 33% rated Williams Partners (WPZ) as a “buy,” and 93% rated Enterprise Products Partners (EPD) as a “buy.”

Projections for 2017

Kinder Morgan announced its preliminary 2017 financial projections in December 2016. “The fundamentals of our business remain strong. We expect to generate $4.46 billion of distributable cash flow for 2017 which continues to provide us great strength and flexibility. We are also confident in our outlook for growth, largely supported by our $13 billion backlog of energy infrastructure expansion opportunities that have a high probability of completion over the next few years,” said Steve Kean, Kinder Morgan’s president and CEO.

Flat dividends

Kinder Morgan expects to declare dividends of $0.5 per share in 2017—the same as its current dividends. According to Kinder Morgan, it has a significant backlog of capital projects. As these projects are placed into service, the company will generate additional cash flows which can be used to increase dividends in the future. The company expects to “provide guidance on a revised dividend policy in the latter part of 2017.”

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