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Kinder Morgan’s Q1 Earnings Are Expected to Rise 9%

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KMI’s first-quarter results

Kinder Morgan (KMI) is expected to report its earnings results for the first quarter of 2019 on April 16. Analysts expect the company to report EPS of $0.24 in the quarter compared to $0.22 in the first quarter of 2018, implying a 9% year-over-year rise.

The company’s EPS are expected to be 4% lower than its remarkably high EPS of $0.25 in the fourth quarter of 2018. Strong growth in US natural gas demand has been driving Kinder Morgan’s earnings growth over the last few quarters.

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As the graph above shows, Kinder Morgan exceeded its EPS estimates in four of the last nine quarters. It missed estimates in three quarters and met estimates in the remaining two quarters. Kinder Morgan makes up ~3.2% of the Energy Select Sector SPDR ETF (XLE).

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Expected earnings drivers

Strong natural gas demand benefited Kinder Morgan’s Natural Gas Pipelines segment in the fourth quarter. It’s expected to contribute to the segment’s first-quarter earnings as well.

Natural gas prices fell ~9% in the first quarter. Natural gas prices averaged $2.92 per MMBtu (million British thermal units) compared to $3.77 per MMBtu in the fourth quarter of 2018 and $3.08 per MMBtu in the first quarter of 2018. These lower prices could affect Kinder Morgan’s first-quarter results. On the other hand, crude oil prices rose 32% in the first quarter of 2019. Higher oil prices should benefit the company’s performance during the quarter.

Contributions from growth projects are also expected to contribute to Kinder Morgan’s first-quarter earnings growth.

Kinder Morgan’s peer ONEOK (OKE) is expected to report its first-quarter earnings results on April 29, and Williams Companies (WMB) is expected to report its earnings results on April 30.

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