Kinder Morgan’s 1Q17 Net Income Falls 9%, Misses Estimates



Fall in net income

Kinder Morgan (KMI) reported its 1Q17 results on April 19, 2017, after the market closed. The company’s adjusted net income for the quarter stood at $371 million, missing consensus estimates of ~$400 million. KMI’s 1Q17 net income fell 9% compared to 1Q16.

The chart below compares KMI’s net income with analysts’ consensus estimates over the last ten quarters. KMI reported distributable cash flow for 1Q17 of ~$1.22 billion, almost flat compared to ~$1.23 billion for 1Q16.

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Factors impacting net income

Kinder Morgan’s (KMI) 1Q17 earnings were impacted by lower contributions from SNG (Southern Natural Gas) following the 50% sale of the pipeline during 3Q16. KMI’s 1Q17 earnings were affected by reduced volumes on some of its midstream gathering and processing assets, lower tariff rates on KMI’s Colorado Interstate Gas Company pipeline, and lower commodity prices. We’ll discuss these factors in greater detail later in this series.

1Q17 dividends

KMI announced a cash dividend of $0.125 per share for the quarter. KMI expects to declare dividends of $0.50 per share for 2017.

In comparison, Plains All American Pipeline (PAA) announced a 1Q17 distribution of $0.55 per common unit, which is same as its 4Q16 distribution. Enterprise Products Partners (EPD) announced a 1.2% increase in its 1Q17 per unit distribution over 4Q16.

KMI’s yield

Kinder Morgan’s yield of 2.2% is lower than 5.7% for Enterprise Products Partners, 4.3% for Magellan Midstream Partners (MMP), and 6.0% for Energy Transfer Equity (ETE).

In comparison, the Alerian MLP ETF (AMLP) is trading at a yield higher than 7.0%. The SPDR S&P 500 ETF (SPY) currently yields nearly 2.0%. The energy sector forms nearly 6.6% of the S&P 500 Index (SPX-INDEX).


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