There is a very simple answer to why the PE is so high, and it's a GOOD THING:
KMI just rolled up all of its MLP subsidiaries. KMI paid for the vast majority of the transaction with stock. All of the subsidiary MLP assets were marked up from the values where they were carried on the books at the predecessor MLPs. Therefore the book value of the assets increased dramatically but these are the same assets as before, therefore they require no additional capital expenditure to maintain. However, based on US accounting rules KMI is now able to claim depreciation deductions on the stepped up asset value. So now with the same amount of cash flow before taxes, KMI pays less taxes because it has lower taxable earnings, and therefore after tax cash flow available to pay dividends increases because less money is being wasted on paying corporate income tax at 36%.
So KMI is earning far more cash than the PE ratio lets on, and Rich Kinder has intentionally setup this vehicle to generate more cash flow than taxable income. So this is a tax efficient investment. This company is really trading at about 18X cash flow, has an incredibly strong moat, is the largest player (or maybe second largest player if the ETE/WMB deal gets done) in one of the biggest growth sectors of the next 10 years, and we are growing at a steady clip over the next 5 years even without factoring in lots of potential upside catalysts that haven't been baked into the numbers.
I would look at KMI as currently trading at 18X cash earnings, we are trading at 15.7X 2016 cash earnings with a company that is growing 10% a year and paying a 5% dividend. The downside it we have a high level of debt/EITDA of 5.6X, the good news is these are high quality assets that are going to be earning more money and have steady long term contracts. I classify KMI as a growth at a reasonable price stock. If you use EPS instead of DCF you are totally off because depreciation is HUGE compared to actual maintenance CAPEX
It is so nonsensical to value this particular company based on the EPS number rather than Distributable Cash Flow. The ENTIRE REASON for the recent restructuring of the company was to provide a stepped up basis in KMI's assets so the company could record a larger depreciation write off. Depreciation reduces GAAP earnings, but has zero impact on pre-tax cash flow. However since taxable earnings are now reduced there is now MORE cash flow available to pay dividends because of the reduced tax burden. So I'll take $0.00 or negative EPS happily so long as Kinder Morgan continues to grow Distributable Cash Flow.