Kinder Morgan (KMI) Registers a Bigger Fall Than the Market: Important Facts to Note

Kinder Morgan (KMI) shares underperformed the S&P 500 and its sector over the past month, closing down 0.47% in the latest session. Upcoming financial results are expected to show EPS of $0.27 and revenue of $3.85 billion, representing year-over-year increases of 8% and 7.88%, respectively; full-year estimates project EPS of $1.26 and revenue of $16.36 billion. The stock currently holds a Zacks Rank of #3 (Hold), with a Forward P/E ratio of 21.77, a premium compared to its industry's average.

Analysis

Kinder Morgan (KMI) shares recently closed at $27.34, a -0.47% decline from the prior day, underperforming the S&P 500's marginal 0.04% loss. Over the past month, KMI's 3.27% gain significantly trailed both the Oils-Energy sector's 5.79% increase and the S&P 500's substantial 13.42% rise, indicating relative weakness. Despite this recent underperformance, the company is projected to report an EPS of $0.27 for its upcoming release, an 8% year-over-year increase, with revenues forecasted at $3.85 billion, up 7.88% year-over-year. Full-year consensus estimates are also positive, projecting earnings of $1.26 per share (+9.57% YoY) and revenue of $16.36 billion (+8.35% YoY). However, the Zacks Consensus EPS estimate has seen a 0.79% downward revision over the past month, signaling some caution among analysts regarding near-term business trends. Currently, KMI holds a Zacks Rank of #3 (Hold). Valuation metrics show KMI trading at a Forward P/E ratio of 21.77, a premium to its industry's average of 16.97, and a PEG ratio of 3.16, also above the industry average of 2.62. The Oil and Gas - Production and Pipelines industry itself is ranked in the bottom 32% of over 250 industries by Zacks, suggesting broader sector headwinds.

Key Decisions for Investors

• Investors should closely monitor Kinder Morgan's upcoming earnings release to see if the forecasted 8% EPS and 7.88% revenue growth materializes, especially in light of recent downward EPS estimate revisions.
• Given KMI's recent stock underperformance relative to the market and its sector, coupled with a premium valuation (Forward P/E of 21.77 vs. industry 16.97), a cautious approach is warranted despite positive full-year growth projections.
• Consider the current Zacks Rank #3 (Hold) and the relatively weak Zacks Industry Rank (bottom 32%) as factors that might temper near-term upside potential for the stock.