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MLP Valuations Today: How KMI, EPD, PAA, and OKE Compare

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KMI’s EV-to-EBITDA multiple

Kinder Morgan (KMI) stock is now trading at a forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of nearly 12x. This figure is lower than KMI’s five-year average multiple of ~17x, and a lower multiple can indicate a possible undervaluation.

By comparison, Enterprise Products Partners (EPD), Plains All American Pipeline (PAA), and ONEOK (OKE) are now trading at forward EV-to-EBITDA multiples of 13.7x, 13.5x, and 11.5x, respectively. Kinder Morgan’s multiple is thus lower than the average among these select peers.

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KMI’s yield compared to peers

Kinder Morgan’s yield of 2.4% is lower than most of its peers as well as the sector. For example, Enterprise Products Partners is trading at a yield close to 6%, while Magellan Midstream Partners (MMP) and Energy Transfer Equity (ETE) are trading at yields of 4.5% and 6%, respectively.

Notably, the Alerian MLP ETF (AMLP), an ETF of top infrastructure MLPs (master limited partnerships), is trading at a yield higher than 7%, whereas the SPDR S&P 500 ETF (SPY) is now yielding nearly 2%. The energy sector forms ~6.6% of the S&P 500 Index (SPX-INDEX).

Now let’s take a look at what Wall Street analysts are recommending for Kinder Morgan in the next and final part of the series.

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