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Does Kinder Morgan’s Valuation Look Attractive?

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KMI’s EV-to-EBITDA

Kinder Morgan (KMI) stock is currently trading at a forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of 11.5x. That’s lower than its five-year average of nearly 13.7x. KMI’s multiple is also lower than 12.5x for Plains All American Pipeline (PAA), 13.4x for Enterprise Products Partners (EPD), and 14.3x for ONEOK (OKE).

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Possible undervaluation?

KMI’s lower multiple may indicate possible undervaluation. The above graph compares Kinder Morgan’s multiple with its peers as well as its historical average. As the graph shows, both EPD and KMI are trading at a forward EV-to-EBITDA multiple that’s lower than their respective historical average multiples.

Plains All American Pipeline (PAA) and ONEOK (OKE) are trading at forward multiples that are higher than their respective historical average multiples.

Kinder Morgan has fallen 6.0% year-to-date. In comparison, EPD, PAA, and OKE have fallen 1.0%, 21.0%, and 9.0%, respectively.

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