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Kinder Morgan (KMI) to Report Q1 Earnings: What's in Store?

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Zacks Equity Research
·4 min read
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Kinder Morgan, Inc. KMI is scheduled to report first-quarter 2021 earnings on Apr 21.

In the last reported quarter, the leading energy infrastructure company’s adjusted earnings per share of 27 cents beat the Zacks Consensus Estimate of 24 cents, thanks to contributions from the Texas Intrastate systems and Natural Gas Pipeline of America. This was partially offset by lower demand for terminal assets.

Notably, Kinder Morgan’s earnings beat the Zacks Consensus Estimate once, missed on another occasion and met the same twice in the trailing four quarters, with the average surprise being 1.7%. This is depicted in the graph below:

Kinder Morgan, Inc. Price and EPS Surprise

Kinder Morgan, Inc. Price and EPS Surprise
Kinder Morgan, Inc. Price and EPS Surprise

Kinder Morgan, Inc. price-eps-surprise | Kinder Morgan, Inc. Quote

Let’s see how things have shaped up prior to this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for first-quarter earnings per share of 23 cents has witnessed two upward revisions and no downward movement over the past 30 days. The estimated figure suggests a decline of 4.2% from the prior-year reported number.

The consensus estimate for first-quarter revenues of $3.01 billion indicates a 3% decline from the year-ago reported figure.

Factors to Consider

Being a leading North American midstream energy firm, Kinder Morgan is likely to have generated stable fee-based revenues in the first quarter from the gigantic natural gas transportation network that spreads across roughly 70,000 miles.

Moreover, the Zacks Consensus Estimate for the company’s adjusted earnings before depreciation, depletion and amortization expenses — including amortization of excess cost of equity investments (EBDA) — from the Terminals business is pegged at $258 million, implying a marginal increase from the year-ago period. Recovering demand from the Asian economies might have aided the segment.

However, the coronavirus pandemic is expected to have resulted in lower drilling activities and in turn reduced natural gas production from the year-ago level. Therefore, daily transportation volumes of natural gas are expected to have declined year over year in the March quarter. The Zacks Consensus Estimate for its transportation volumes through natural gas pipelines is pegged at 37,234 billion British thermal units per day (BBtu/d), indicating a decline from the year-ago quarter’s 39,095 BBtu/d.

Markedly, due to massive energy demand destruction caused by the pandemic, volumes of refined product and crude & condensate might have been lower in the first quarter. As such, the Zacks Consensus Estimate for the company’s Products Pipelines EBDA is pegged at $260 million, suggesting a decline from $269 million a year ago.

Earnings Whispers

Our proven model does not predict an earnings beat for Kinder Morgan this time around. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: Kinder Morgan has an Earnings ESP of -0.62%. This is because the Most Accurate Estimate for the quarter is currently pegged below the Zacks Consensus Estimate of 23 cents per share. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Kinder Morgan currently carries a Zacks Rank #3.

Stocks to Consider

While an earnings beat looks uncertain for Kinder Morgan, here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

EOG Resources, Inc. EOG has an Earnings ESP of +14.80% and a Zacks Rank of 1. It is scheduled to report first-quarter results on May 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

Baker Hughes Company BKR has an Earnings ESP of +3.97% and is a Zacks #3 Ranked player. The company is scheduled to release first-quarter results before the opening bell on Apr 21.

Continental Resources, Inc. CLR has an Earnings ESP of +51.11% and a Zacks Rank #3. The firm is scheduled to release quarterly earnings on Apr 28.

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EOG Resources, Inc. (EOG) : Free Stock Analysis Report

Continental Resources, Inc. (CLR) : Free Stock Analysis Report

Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report

Baker Hughes Company (BKR) : Free Stock Analysis Report

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