Kinder Morgan may be undervalued with poor growth indicators, but the 16 analysts following the company give it an rating of hold. Their target prices range from $17.0 to $23.0 per share, for an average of $20.5. At today's price of $16.59, Kinder Morgan is trading -19.05% away from its average target price, suggesting there is an analyst consensus of some upside potential for the stock.
Kinder Morgan, Inc. operates as an energy infrastructure company in North America. The large-cap Utilities company is based in Houston, TX. Kinder Morgan has provided a 6.8% dividend yield over the last 12 months.
Kinder Morgan has a trailing twelve month P/E ratio of 15.7, compared to an average of 17.53 for the Utilities sector. Considering its EPS guidance of $1.28, the company has a forward P/E ratio of 13.0.
On the other hand, the market is potentially undervaluing Kinder Morgan in terms of its book value because its P/B ratio is 1.22. In comparison, the sector average P/B ratio is 1.71. The company's shares are currently 10.5% above their Graham number, which suggests that they are not trading at a fair value in terms of earnings and net assets.
Why would analysts be giving such an undervalued stock a bad rating? It's possible that analysts are looking beyond common valuation metrics and taking into account the company's potentially irresponsible use of debt to operate its business. They likely put significant weight behind Kinder Morgan's perceived lack of growth potential, as signaled by its 3.0% rate of revenue growth and capital expenditures that are declining at -3.5%.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $14,144 | $13,209 | $11,700 | $16,610 | $19,200 | $15,875 |
| Revenue Growth | n/a | -6.61% | -11.42% | 41.97% | 15.59% | -17.32% |
| Operating Margins | 27% | 37% | 13% | 18% | 21% | 27% |
| Net Margins | 11% | 17% | 1% | 11% | 13% | 16% |
| Net Income (MM) | $1,609 | $2,190 | $119 | $1,784 | $2,548 | $2,467 |
| Net Interest Expense (MM) | -$1,917 | -$1,801 | -$1,595 | -$1,492 | -$1,513 | -$1,771 |
| Depreciation & Amort. (MM) | $2,297 | $2,411 | $2,164 | $2,135 | $2,186 | $2,237 |
| Earnings Per Share | $0.73 | $0.97 | $0.05 | $0.78 | $1.12 | $1.1 |
| EPS Growth | n/a | 32.88% | -94.85% | 1460.0% | 43.59% | -1.79% |
| Diluted Shares (MM) | 2,216 | 2,264 | 2,263 | 2,266 | 2,258 | 2,230 |
| Free Cash Flow (MM) | $2,139 | $2,478 | $2,843 | $4,427 | $3,346 | $3,407 |
| Capital Expenditures (MM) | $2,904 | $2,270 | $1,707 | $1,281 | $1,621 | $2,166 |
| Current Ratio | 0.76 | 0.63 | 0.63 | 0.66 | 0.55 | 0.39 |
| Total Debt (MM) | $40,705 | $34,392 | $34,689 | $33,320 | $31,788 | $3,130 |
| Net Debt / EBITDA | 6.14 | 4.7 | 9.0 | 6.37 | 4.97 | 0.47 |
