U.S. Markets closed
  • S&P 500

    3,666.72
    -2.29 (-0.06%)
     
  • Dow 30

    29,969.52
    +85.73 (+0.29%)
     
  • Nasdaq

    12,377.18
    +27.82 (+0.23%)
     
  • Russell 2000

    1,847.26
    +9.23 (+0.50%)
     
  • Crude Oil

    45.64
    +0.36 (+0.80%)
     
  • Gold

    1,845.70
    +15.50 (+0.85%)
     
  • Silver

    24.08
    +0.05 (+0.21%)
     
  • EUR/USD

    1.2151
    +0.0035 (+0.2916%)
     
  • 10-Yr Bond

    0.9200
    -0.0280 (-2.95%)
     
  • Vix

    21.72
    +0.55 (+2.60%)
     
  • GBP/USD

    1.3452
    +0.0076 (+0.5677%)
     
  • USD/JPY

    103.8730
    -0.5510 (-0.5277%)
     
  • BTC-USD

    19,361.14
    +412.24 (+2.18%)
     
  • CMC Crypto 200

    380.49
    +6.08 (+1.62%)
     
  • FTSE 100

    6,490.27
    +26.88 (+0.42%)
     
  • Nikkei 225

    26,809.37
    +8.39 (+0.03%)
     

Will Lower Volumes Affect Kinder Morgan's (KMI) Q3 Earnings?

Zacks Equity Research
·4 min read

Kinder Morgan Inc. KMI is scheduled to report third-quarter 2020 earnings on Oct 21.

In the last reported quarter, this leading energy infrastructure company’s earnings per share of 17 cents missed the Zacks Consensus Estimate by a penny due to lower contributions from the Tennessee gas pipeline and a plunge in demand for refined products.

Kinder Morgan’s earnings missed the Zacks Consensus Estimate only once and met the same thrice in the trailing four quarters, with the average negative surprise being 1.4%. 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 the company’s third-quarter earnings per share of 21 cents has witnessed two upward revisions and one downward movement over the past 60 days. The estimated figure suggests a decline of 4.6% from the prior-year reported number.

The consensus estimate for third-quarter revenues of $3.01 billion indicates a 6.4% decline from the year-ago reported figure.

Expectations

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

The Zacks Consensus Estimate for adjusted EBDA from the CO2 segment is pegged at $156 million, indicating a rise from $149 million in the year-ago quarter. However, the same for the Natural Gas Pipelines segment is pegged at $1,072 million, signaling a decline from $1,090 million in third-quarter 2019. Moreover, the Zacks Consensus Estimate for adjusted EBDA from the Products Pipelines segment is pegged at $268 million, indicating fall from $336 million in the year-ago quarter. Also, the same for the Terminals segment is pegged at $242 million, indicating a decrease from $295 million in the prior-year quarter.

The Zacks Consensus Estimate for transportation volumes through natural gas pipelines is pegged at 35,851 billion British thermal units per day (BBtu/d), suggesting a decline from the year-ago quarter’s 37,029 BBtu/d. The Zacks Consensus Estimate for gas gathering volumes through natural gas pipelines is pegged at 3,043 BBtu/d, implying a decrease from the year-ago quarter’s 3,380 BBtu/d.

Although the company’s stable fee-based revenues are likely to support third-quarter results, lower transportation and gathering volumes might have offset the positives.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Kinder Morgan this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: Earnings ESP for the company is -1.18%. This is because the Most Accurate Estimate is placed lower than the Zacks Consensus Estimate of 21 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

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

Energy Stocks With Favorable Combination

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 +200.99% and is a Zacks #2 Ranked player. The company is scheduled to release third-quarter results on Nov 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

Range Resources Corporation RRC has an Earnings ESP of +100.00% and a Zacks Rank of #1. It is scheduled to report third-quarter results on Oct 29.

Pioneer Natural Resources Company PXD has an Earnings ESP of +28.88% and holds a Zacks Rank #3. It is set to report third-quarter results on Nov 4.

Legal Marijuana: An Investor’s Dream

Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.

Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.

Download Marijuana Moneymakers FREE >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
 
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
 
Range Resources Corporation (RRC) : Free Stock Analysis Report
 
Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research