Kinder Morgan Inc KMI reported Q4 results that were broadly in-line with expectations after the close Wednesday and maintained its 2019 guidance. Although the company has some exposure to flailing PG&E Corporation PCG, the downside risk is likely to be modest, according to Wells Fargo.
The Analyst
Analyst Michael Blum maintains an Outperform rating on Kinder Morgan with an unchanged $21 price target.
The Thesis
Kinder Morgan reported its Q4 adjusted EBITDA at $1.962 billion, in-line with expectations. The impact of marginally below-expectations results in natural gas pipelines was offset by lower G&A expenses.
The company’s DCF per share of 56 cents beat the estimate of 54 cents, driven by higher earnings from joint ventures. Kinder Morgan announced a Q4 dividend of 20 cents per share.
Although the impact of a PG&E bankruptcy should be watched, the downside risk to Kinder Morgan should amount to only 1 percent of DCF even in a worst-case scenario, Blum said in a Thursday note.
Kinder Morgan’s DCF and EBITDA remained relatively flat from 2014 through 2017, mainly on account of headwinds in the company’s base business, the analyst said, adding that the headwinds are fading. DCF per share grew 6 percent in 2018 and is likely to increase by an average of 6 percent annually from 2019-21, Blum said.
“With KMI’s balance sheet improved, key financial metrics growing again and share buybacks potentially on the horizon, we think KMI should outperform peers in 2019."
Price Action
Kinder Morgan shares were trading down by more than 1 percent at $17.29 at the time of publication Thursday.
Related Links:
A Preview Of Kinder Morgan's Q4 Earnings
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