Yahoo Finance Should You Include Kinder Morgan in Your Portfolio?
Kinder Morgan to Release 2Q15 Earnings July 16: What to Expect?
Analysts’ recommendations
In this article, we’ll look at what Wall Street analysts recommend for Kinder Morgan (KMI). At a broader level, 77.3% of analysts rate Kinder Morgan a “buy,” 18.2% rate it a “hold,” and 4.5% rate it a “sell.”
The median broker target price of $47 for KMI implies a ~19.4% price return in the next 12 months. KMI’s peers The Williams Companies (WMB) and Energy Transfer Partners (ETP) have “buy” ratings from 86.7% and 70.6% of analysts, respectively. For Spectra Energy Partners (SE), 58.8% of analysts rate it a “hold.”
KMI, WMB, and SE together make up ~9.37% of the Energy Select Sector SPDR Fund (XLE). The Williams Companies holds the GP (general partner) of Williams Partners, L.P. (WPZ), while Energy Transfer Partners holds the GP of Sunoco Logistics Partners (SXL).
Positive outlook
Even though analysts expect KMI’s earnings and revenues to fall in 2Q15, this shouldn’t affect KMI’s overall long-term outlook. Investors should consider the following positives and negatives before deciding to include KMI in their portfolios.
Positives
toll-road-like business with limited exposure to commodity prices
five-year project backlog of more than $18 billion
expected dividend growth of 10% per year through 2020
elimination of MLP structure, leaving room for managing dividends during tough times
Negatives
Maintaining high growth in the long run is tough for a company of KMI’s size. KMI became the third largest energy company in the United States after its 2014 consolidation with its subsidiaries.
Out of the $18 billion five-year project backlog, $5.4 billion comes from the expansion of the Trans Mountain Pipeline system. The project has been mired in regulatory hurdles for some time.
For more pre-earnings coverage on midstream companies, check out our Midstream Oil and Gas page.
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