| Will Kinder Morgan (KMI) Surprise Earnings Estimates in Q4? | |
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Midstream energy assets operator, Kinder Morgan, Inc. KMI is expected to report fourth-quarter 2015 earnings on Jan 20, after the closing bell.
In the last quarter, the company’s earnings of 19 cents per share beat the Zacks Consensus Estimate of 18 cents but plunged 40.6% from the year-ago earnings of 32 cents. Let’s see how things are shaping up prior to the announcement.
Factors Likely to Affect Earnings
Kinder Morgan is undergoing numerous large scale projects that could face delays or opposition. Delays in these projects are likely to defer cash flow realizations. In this respect, the TransMountain pipeline expansion in Canada deserves mention. Work on the pipeline has already been deferred by nine months due to local opposition and Canadian regulations. The project is expected to cost approximately $5.4 billion, which signifies about 30% of Kinder Morgan’s project backlog. Any further delay in the project will have an adverse impact on the company’s earnings as well as long-term growth.
Further, we believe that gas infrastructure opportunities are limited to the near-to-medium term. This is mainly due to low basis differentials and reduced dry gas drilling. The only positive we see for natural gas infrastructure is the Marcellus shale development.
However, the recent reorganization of Kinder Morgan companies into a single entity has created the largest midstream company in North America. This will facilitate access to additional projects and hence, lead to improved growth. We believe that the company’s size will prove to be advantageous with opportunities to build smaller adjacent pipelines at a lower cost than peers. Further, an increased demand for power generation and exports are expected to drive continued infrastructure build-out for the company in the coming quarters. Such positives are likely to boost the fourth-quarter earnings as well.
Last quarter, Kinder Morgan had increased its dividend by 16% to 51 cents per share from 44 cents a year ago. This trend is expected to continue into the fourth quarter as well. Per the company’s projections for 2015, it is likely to declare dividends of $2.00 per share, up about 16% from $1.74 paid in 2014.
Earnings Whispers
Our proven model does not conclusively show that Kinder Morgan is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently -17.65%. This is because the Most Accurate estimate for Kinder Morgan stands at 14 cents, while the Zacks Consensus Estimate is pegged at 17 cents.
Zacks Rank: Kinder Morgan carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult.
Conversely, we caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the same space which, according to our model, have the right combination of elements to post an earnings beat this quarter:
Scana Corporation SCG has an Earnings ESP of +2.50% and a Zacks Rank #2.
Ensco plc ESV has an Earnings ESP of +6.76% and a Zacks Rank #3.
Baker Hughes Inc BHI has an Earnings ESP of +20.00% and a Zacks Rank #3.
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Kinder Morgan
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CODE : KMP |
ISIN : US4945501066 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
Kinder Morgan est une société de production minière basée aux Etats-Unis D'Amerique. Kinder Morgan est cotée aux Etats-Unis D'Amerique et en Allemagne. Sa capitalisation boursière aujourd'hui est 46,0 milliards US$ (36,7 milliards €). La valeur de son action a atteint son plus bas niveau récent le 25 juin 1999 à 10,00 US$, et son plus haut niveau récent le 26 novembre 2014 à 102,03 US$. Kinder Morgan possède 450 600 000 actions en circulation. |