Kinder Morgan (KMI) Could Be 11% Undervalued As Export Demand Supports Its Narrative

Rising US energy exports are back in focus, with Enterprise Products Partners reporting record pipeline and marine terminal volumes, and Kinder Morgan (KMI) identified as one of the companies benefiting from this export trend.

Kinder Morgan’s share price has tracked this export story, with the stock now at US$31.56 and a year-to-date share price return of 13.89%. Over longer periods, the 1-year, 3-year and 5-year total shareholder returns of 21.67%, very large and very large respectively, point to strong longer-term momentum.

Scan Kinder Morgan alongside other export oriented energy infrastructure stocks with the hand picked 38 power grid technology and infrastructure stocks

Kinder Morgan now trades at US$31.56 while analyst targets and one intrinsic value estimate sit higher. With that gap in view, where does a fair value range really fall for this export focused infrastructure stock?

Most Popular Narrative: 10.7% Undervalued

The most followed Kinder Morgan narrative places fair value at $35.33, above the last close at $31.56. That gap rests on specific growth and profitability assumptions, rather than sentiment.

Anticipated growth in global natural gas demand, driven by rising populations in Asia and Africa and increased energy needs from urbanization, is expected to sustain or increase utilization of Kinder Morgan’s core pipeline and LNG infrastructure, underpinning long-term revenue growth through higher throughput volumes and long-term contracts.

Read the complete narrative. Read the complete narrative.

Want to see what underpins that export driven view on Kinder Morgan? The narrative leans on steady contract backed revenue, modest margin shifts, and a richer future earnings multiple. The key is how those moving parts line up over the next few years to justify that fair value band.

Result: Fair Value of $35.33 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, Kinder Morgan’s narrative still faces pressure from high net debt near 4x EBITDA and the risk that energy transition policies curb long term pipeline demand.

Find out about the key risks to this Kinder Morgan narrative.

Another View: Kinder Morgan Through Its P/E Ratio

The Kinder Morgan story looks different when you switch from fair value estimates to what the market is already paying. The stock trades on a P/E of 20.4x, compared with 12.7x for the wider US oil and gas industry and 17x for direct peers.

At the same time, the fair ratio for Kinder Morgan is 22.4x. That sits above the current 20.4x P/E, yet below the richer multiples implied by some analyst narratives. For investors, the question is whether the market edges closer to the lower industry and peer levels or to that higher fair ratio.

See what the numbers say about this price in our valuation breakdown, then decide which set of assumptions you trust most for Kinder Morgan See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Mixed on Kinder Morgan after reading this. If you want to move quickly and form your own view, start with the 3 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Kinder Morgan?

If Kinder Morgan has sharpened your interest, do not stop here. Broader context from other stocks can help you judge whether this opportunity truly earns a place in your portfolio.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include KMI.

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