The stock of Kinder Morgan (KMI, Financial) is witnessing notable movement today, trading at $29.38, which reflects a 0.88% increase from the previous trading session. This movement can be attributed to recent strategic acquisitions and pipeline expansions.
After overcoming challenges in 2023, Kinder Morgan has demonstrated substantial recovery and growth in 2024, with a stock price surge of 55.3%, outperforming the S&P 500's 23% rise. This robust performance is primarily driven by strategic acquisitions, including the notable purchase of NextEra Energy Partners' South Texas natural gas pipelines for $1.8 billion in December 2023. These initiatives, along with organic expansions and cost efficiencies, have resulted in a 4% rise in EBITDA and a 5% increase in adjusted EPS for the first nine months ending September 30.
As of the close of the third quarter, Kinder Morgan's project backlog has expanded to $5.1 billion, a significant increase from $3 billion at the end of 2023, with natural gas projects being a major component. The company is also channeling investments into low-carbon energy sources, including renewable natural gas and renewable diesel, reflecting its commitment to sustainable energy solutions.
In a strategic move to further bolster its portfolio, Kinder Morgan has announced the acquisition of natural gas gathering and processing assets from Outrigger Energy in North Dakota for $640 million. This transaction is expected to be finalized in the first quarter and is projected to be immediately accretive to earnings. This acquisition may provide grounds for an optimistic outlook for 2025 in forthcoming earnings reports.
The company is forecasting a 4% growth in adjusted EBITDA and an 8% increase in adjusted EPS for 2025, fueled by broad-based growth across all its business segments. With over 60% of its cash flow deriving from natural gas, Kinder Morgan benefits significantly from its refined products pipelines, terminals, and carbon dioxide operations. As it continues to integrate acquired assets and operationalize expansion projects, Kinder Morgan anticipates increased cash flows to support larger dividends, targeting an eighth consecutive annual dividend increase in 2025.
Currently, the stock of Kinder Morgan (KMI, Financial) holds a market capitalization of $65.26 billion and trades with a price-to-earnings (P/E) ratio of 25.77. According to its GF Value, Kinder Morgan is deemed "Significantly Overvalued" with a GF Value estimate of $16.87. Investors can explore a detailed valuation analysis on the GF Value page. Despite its challenges, the company's high Piotroski F-Score of 7 indicates a very healthy situation, and insider buying over the past three months suggests confidence in future performance.
