Tumbling to a price of $18.43 during today's afternoon trading session, shares of Kinder Morgan are now -6.99% below their average target price of $19.82. Does this mean the stock will reverse course? Analysts are giving KMI an average rating of hold and target prices ranging from $18 to $24 dollars per share.
The market sentiment on the stock is decidedly optimistic, since Kinder Morgan has a short interest of only 2.1%. This is the percentage of the share float that is being shorted. Each short position represents an investor's expectation that the price of the stock will decrease in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
Another way to gauge the sentiment on Kinder Morgan is to look at the percentage of institutions that are invested in the stock. In this case, 63.2% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
Overall, there is mixed market sentiment towards Kinder Morgan because of its an analyst consensus of some upside potential, a hold rating,, an average amount of shares sold short, and an average number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about KMI:
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It has trailing 12 month earnings per share (Eps) of $1.11 per share
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Kinder Morgan has a trailing 12 month Price to Earnings (P/E) ratio of 16.6 while the S&P 500 average is 15.97
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The company has a Price to Book (P/B) ratio of 1.3 in contrast to the S&P 500's average ratio of 2.95
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Kinder Morgan is a Energy company, and the sector average P/E and P/B ratios are 9.11 and 1.45 respectively
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