What Does Kinder Morgan’s Valuation Indicate?

Kinder Morgan (KMI) is currently trading at a forward EV-to-EBITDA multiple of nearly 12.0x.

Rekha Khandelwal, CFA - Author

Dec. 4 2020, Updated 10:52 a.m. ET

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Discount compared to historical valuation

Kinder Morgan (KMI) is currently trading at a forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of nearly 12.0x. That’s lower than its five-year average multiple of ~17.0x.

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Discount compared to peers

Kinder Morgan’s forward EV-to-EBITDA is also lower compared to nearly 14.0x for Enterprise Products Partners (EPD) and Plains All American Pipeline (PAA). However, it’s comparable to Oneok’s (OKE) multiple.

The above graph compares KMI’s forward EV-to-EBITDA multiple with selected peers. KMI seems to be trading at a discount compared to its own historical valuation and compared to its peers.

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).

Kinder Morgan’s net income for 1Q17 is expected to fall marginally. You can find out more by reading What to Watch in Kinder Morgan’s 1Q17 Results.


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