Kinder Morgan Q1 2024 earnings on deck; what to expect

• U.S. oil and gas pipeline operator Kinder Morgan (NYSE:KMI) is scheduled to announce Q1 earnings results on Wednesday, April 17th, after market close.
• The consensus EPS estimate is $0.34 (+13.3% Y/Y) and the consensus revenue estimate is $4.36 billion (+12.1% Y/Y).
• Over the last 2 years, KMI has beaten EPS estimates 63% of the time and has beaten revenue estimates 38% of the time.
• Over the last 3 months, EPS estimates have seen 3 upward revisions and 1 downward. Revenue estimates have seen 1 upward revision and 2 downward.
• The company on January 18 missed expectations for Q4 adjusted earnings and revenues, as weakened natural gas prices and higher interest expenses hurt margins.
• KMI has a Quant rating of "BUY", with a 4.30 rating score.
• KMI has an industry ranking of 12 out of 56 among oil and gas storage and equipment stocks, as per SA's Quant ranking.
• Wall Street and Seeking Alpha authors rate the KMI stock a "BUY".
• In 2023, KMI stock rose 4.5%, while the S&P 500 Energy Sector Index fell 4.8%. The benchmark S&P 500 Index rose 24.2% for the year.
• Stock is up 0.7% so far this year as of Monday's close.

Through the lens of Wall Street

In March, analysts at Truist Securities downgraded KMI to "Hold" from a previous investment rating of "Buy" and cut PT by $2 to $20.

"We estimate KMI's valuation is in-line with the peer group average on an earnings basis though we forecast weaker FCF yield and growth than peers... Our 2024/2025 EBITDA forecasts are relatively the same as prior at $8.1B/$8.0B though our 2024/2025 FCF estimates have slightly fallen versus prior to $3.0B/$3.2B causing our price target decrease... We forecast KMI’s earnings and cash flow to sequentially grow this year as nearly 90% business is tied to take or pay contracts. However, capital spend is also likely to grow this year given a number of new projects causing FCF to fall," Truist analysts wrote in the report.

Citi Research in March adjusted its estimates and expects KMI's 1Q24 EBITDA to come in at $2.13bln, below the company’s budgeted ~$2.18bln. Citi said lower commodity prices, producer activity curtailments, and a warmer winter are headwinds for the company vs. budget, and estimates that KMI is now trending ~2% below budget.

On April 1, Mizuho analysts reiterated Buy/$22 PT on KMI for its attractive valuation and operational leverage that should ultimately overcome idiosyncratic headwinds, even though there are already concerns that a weaker gas strip could present headwinds.

Barclays expects KMI to post Q1 EBITDA of $2,109 million vs. 2,137 million.