In an April 18, 2019 research note, Raymond James analyst Justin Jenkins reported that Kinder Morgan Inc. (KMI:NYSE) had a "mostly quiet," Q1/19, showing "strong performance on both a relative and absolute basis."
In light of its Q1/19 earnings, Raymond James maintained its Outperform rating and $21 per share price target on this energy infrastructure company. "Following a solid Q1/19 print and outlook, we continue to see a reasonable risk/reward set-up for shares of Kinder Morgan," Jenkins added.
The analyst reviewed the company's Q1/19 earnings and recent news.
For Q1/19, Kinder Morgan reported adjusted EBITDA of $1.947 billion. This fell short of Raymond James' $1.969 projection but surpassed the Street's $1.928 billion forecast. Discounted cash flow (DCF) of $1.371 billion, however, beat both projections, Raymond James' of $1.327 billion and consensus' of $1.247 billion.
Compared to the benchmarks, in Q1/19, the company was up about 28% versus the Alerian MLP Index (+14%) and versus the S&P 500 (+16%).
In other news, the ongoing strategic review of Kinder Morgan Canada (KMI) should be done soon, according to management. The options under consideration for this Canadian subsidiary are to leave it as is, operated as a standalone entity, to sell it or to combine it with another company. According to Kinder Morgan management, KMI accounts for about 2% of Kinder Morgan's EBITDA.
One negative on Kinder Morgan, Jenkins pointed out, is that because management just raised its year-end 2019 leverage target to 4.6x from 4.5x and now anticipates full-year EBITDA will come in slightly below budget, "this largely takes the prospect of meaningful share repurchases off the table for 2019."
In light of Kinder Morgan's Q1/19, Raymond James maintained its 2019 EBITDA forecast but slightly increased its DCF estimate, to $4.99 billion from $4.96 billion. It also kept its 2019-2020 dividends and share projections as they were, at $1 and $1.25, respectively.
Jenkins concluded, "Coupled with dividend growth (+25% year over year), share buybacks and solid cash flow stability/growth into 2020, we believe Kinder Morgan is poised to outperform over the next 12–18 months."[NLINSERT]
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Disclosures from Raymond James, Kinder Morgan Inc., April 18, 2019
Analyst Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.
The analyst Justin Jenkins, primarily responsible for the preparation of this research report, attest to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers and that no part of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this research report. In addition, said analyst(s) has not received compensation from any subject company in the last 12 months.
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Raymond James & Associates, Inc. makes a market in the shares of Kinder Morgan, Inc.
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