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Kinder Morgan (KMI) to Report Q4 Earnings: What's in Store?

Zacks Equity Research
·4-min read

Kinder Morgan, Inc. KMI is scheduled to report fourth-quarter 2020 earnings on Jan 20.

In the last reported quarter, the leading energy infrastructure company’s earnings met the Zacks Consensus Estimate, thanks to contributions from the Gulf Coast Express (GCX) pipeline and Elba Liquefaction projects. Notably, Kinder Morgan’s earnings missed the Zacks Consensus Estimate only once and met the same thrice in the trailing four quarters, the average negative surprise being 1.39%. This is depicted in the graph below:

Kinder Morgan, Inc. Price and EPS Surprise

 

Kinder Morgan, Inc. Price and EPS Surprise
Kinder Morgan, Inc. Price and EPS Surprise

Kinder Morgan, Inc. price-eps-surprise | Kinder Morgan, Inc. Quote

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Let’s see how things have shaped up prior to this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings per share of 24 cents has witnessed three upward and one downward revision over the past 60 days. The estimated figure suggests a decline of 8% from the prior-year reported number.

The consensus estimate for fourth-quarter revenues of $3.1 billion indicates an 8.8% decline from the year-ago reported figure.

Factors to Consider

Being a leading North American midstream energy firm, Kinder Morgan is likely to have generated stable fee-based revenues in the fourth quarter from its gigantic natural gas transportation network, spreading across roughly 70,000 miles.

Despite the steady cashflow, the company’s midstream business is likely to have been affected by the coronavirus pandemic in the December quarter. This is because lower drilling activities have reduced natural gas production as compared to the pre-pandemic levels, which in turn is likely to have dented demand for gas transportation pipelines.

Notably, we expect daily transportation volumes of natural gas to have declined year over year in the December quarter. The Zacks Consensus Estimate for its transportation volumes through natural gas pipeline is pegged at 37,424 billion British thermal units per day (BBtu/D), compared with the year-ago quarter’s 39,272 BBtu/D.

Owing to lower transportation volumes, the Zacks Consensus Estimate for the company’s adjusted earnings before depreciation, depletion and amortization expenses, including amortization of excess cost of equity investments (EBDA) from the natural gas pipelines, is pegged at $1,145 million, suggesting a decline from $1,248 million recorded in the December quarter of 2019.

Earnings Whispers

Our proven model does not predict an earnings beat for Kinder Morgan this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Kinder Morgan has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Kinder Morgan currently carries a Zacks Rank #3.

Stocks to Consider

While an earnings beat looks uncertain for Kinder Morgan, here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Baker Hughes Company BKR has an Earnings ESP of +10.21% and is a Zacks #3 Ranked player. The company is scheduled to release fourth-quarter results before the opening bell on Jan 21. You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources, Inc. EOG has an Earnings ESP of +7.02% and a Zacks Rank of 3. It is scheduled to report fourth-quarter results on Feb 25.

RPC, Inc. RES has an Earnings ESP of +26.32% and a Zacks Rank #3. The firm is scheduled to release earnings on Jan 27.

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EOG Resources, Inc. (EOG) : Free Stock Analysis Report
 
RPC, Inc. (RES) : Free Stock Analysis Report
 
Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
 
Baker Hughes Company (BKR) : Free Stock Analysis Report
 
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