Kinder Morgan shares fell by -1.2% during the day's afternoon session, and are now trading at a price of $17.21. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Kinder Morgan's Valuation Is in Line With Its Sector Averages:
Kinder Morgan, Inc. operates as an energy infrastructure company primarily in North America. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 17.53 and an average price to book (P/B) ratio of 1.71. In contrast, Kinder Morgan has a trailing 12 month P/E ratio of 16.2 and a P/B ratio of 1.26.
Kinder Morgan's PEG ratio is 46.83, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
The Company's Revenues Are Declining:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $14,144 | $13,209 | $11,700 | $16,610 | $19,200 | $15,875 |
| Operating Margins | 27% | 37% | 13% | 18% | 21% | 27% |
| Net Margins | 11% | 17% | 1% | 11% | 13% | 16% |
| Net Income (M) | $1,609 | $2,190 | $119 | $1,784 | $2,548 | $2,467 |
| Net Interest Expense (M) | -$1,917 | -$1,801 | -$1,595 | -$1,492 | -$1,513 | -$1,771 |
| Depreciation & Amort. (M) | $2,297 | $2,411 | $2,164 | $2,135 | $2,186 | $2,237 |
| Diluted Shares (M) | 2,216 | 2,264 | 2,263 | 2,266 | 2,258 | 2,230 |
| 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% |
| Avg. Price | $12.72 | $15.51 | $12.62 | $14.79 | $16.82 | $17.2 |
| P/E Ratio | 19.27 | 16.16 | 252.4 | 18.96 | 15.02 | 15.64 |
| CAPEX (M) | $2,904 | $2,270 | $1,707 | $1,281 | $1,621 | $2,166 |
| EV / EBITDA | 10.75 | 9.52 | 16.67 | 13.0 | 11.07 | 6.41 |
| Total Debt (M) | $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 |
| Current Ratio | 0.76 | 0.63 | 0.63 | 0.66 | 0.55 | 0.39 |
Kinder Morgan has weak revenue growth and decreasing reinvestment in the business, not enough current assets to cover current liabilities because its current ratio is 0.39, and a highly leveraged balance sheet. On the other hand, the company has positive EPS growth working in its favor. Furthermore, Kinder Morgan has decent operating margins with a stable trend.
