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Kinder Morgan’s Third-Quarter Earnings Are Expected to Rise

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Oct. 12 2018, Published 4:05 p.m. ET

EPS estimate

Kinder Morgan (KMI) is scheduled to report its third-quarter earnings on October 17 after the market closes. Analysts expect the company’s EPS to rise ~9% sequentially to 21.25 cents per share. The company’s adjusted EPS for the second quarter was 19.5 cents. Kinder Morgan’s expected third-quarter EPS represents a 42% increase YoY (year-over-year). Kinder Morgan beat the EPS estimates in four out of the last ten quarters. The company missed the EPS estimates in three quarters and met the estimates in the remaining three quarters.

The above graph shows Kinder Morgan’s EPS estimates and adjusted EPS over ten quarters.

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Expected earnings drivers

Increased drilling activity in the Bakken and Haynesville shales contributed to Kinder Morgan’s Natural Gas Pipelines segment’s second-quarter earnings growth. The drilling activity remained elevated in the third quarter, which might continue to contribute to the segment’s earnings.

Increased natural gas demand from the power sector, increased exports to Mexico, and new projects placed into service should continue to add to Kinder Morgan’s earnings for the quarter.

Permian Highway Pipeline project

Kinder Morgan made the final investment decision on the Permian Highway Pipeline project in September. The project will transport natural gas from the Permian Basin to markets along the Texas Gulf Coast. The pipeline is expected to come into service in 2020. The project already has commitments from Apache (APA) and ExxonMobil (XOM).

Enterprise Products Partners (EPD) has announced a 0.6% sequential increase in its third-quarter distributions. Enterprise Products Partners is scheduled to announce its third-quarter results on October 31.

Next, we’ll discuss Kinder Morgan’s net income and revenue estimates for the third quarter.

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