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.
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.