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Kinder Morgan Energy Partners Message Board

  • jsroemisch jsroemisch Jan 19, 2012 10:14 AM Flag

    Help me understand this Earnings report

    I have to admit that I have only been in stocks since October - though been in funds for years. So obviously I am only learning this - and asking for help.

    Here is what I am noticing:

    KMP earnings topped earnings of last year by 10 cents (from 41 to 51) Though they missed the analyst's prediction of 62...10 cents isn't a bad thing.

    Is it? "Misses" yes - but gained as well.

    Which means more?

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    • This is my advice to you. I have held KMP and KMR on and off since it was about 34. There is only 3 numbers that are important. Richard Kinder setting distribution for 2012 $4.98. Next the coverage of the distribution. It must be over 1.00. The higher this number the better. Instead of asking the uninformed to explain it, I suggest you get a primer on mlp's and educate yourself. Earnings are not important, Oh yes price of stock is third number.

    • Read the Seeking Alpha conference call transcript, including the Questions and Answers portion. No area of the business was singled out as having difficulty. One would never know from the call that the miss was 11 cents. Its the estimate number that probably should be scrutinized.

      Oh, and there was no mention of any impact from the Keystone Pipeline deferral.

    • As Anal.lyst said above, you need to distiguish between a regular company and a MLP. For most owners of MLP's the cash it throws off in distributions and the growth of those distributions are the objective. For common companies profitability and growth are the main drivers. Take a look at KMP's P/E ratio 612, EPS $0.14. These are rediculous numbers for a company trading at $86. But look at the annual distributions $4.64 or 5.6%. The stock price is being driven by the distributions not the profitablilty.

      • 1 Reply to richoncat
      • TYPO ---EPS was $0.51 not $0.14 as written above. All the points remain the same.

        It's better to beat last year plus beat the estimates. To the extent that investors trust the analysts that cover a given stock, missing their estimates can be a bad thing or nothing. I personally don't give a lot of credit to analysts and I prefer to make my own judgements. So I'd rather see them beat last year. But a lot of folks follow the analysts and will react positively or negatively based upon the earnings headlines. "Beat the street or missed the street."

        Today's action suggests no one cares about that $0.10 miss. They like the $4.98 distribution targets.

    • Despite what fools like billyjoe say earnings mean little for KMP or any other MLP for that matter.

      What matters is DCF (Distributable Cash Flow) from which Distributions are paid.

      Research MLP's for further info or look on MLP message boards for posts by arbtrd, lizahuang, nymarv & others.