
Kinder Morgan (KMI) is one of the leading players in the energy sector in the United States. It is a Master Limited Partnership (MLP), which is involved in gathering, transporting, and processing crude oil, natural gas, condensates, and other refined products.
Most of its revenue comes from the natural gas business, which has done well in the past few years since Russia invaded Ukraine. That invasion has led to a big increase in the amount of gas that Europe buys from the US.
Analysts are optimistic about natural gas since it emits less carbon than coal. Most coal plants will likely transition to natural gas.
Kinder Morgan’s business is mostly immune from the natural gas prices since it makes its money through fees. Its annual revenue jumped from $13 billion in 2019 to $15.3 billion in the last financial year.
Most people invest in MLP companies because of their dividends. Unlike other firms, MLPs have a unique tax treatment since it is taxed as a pass-through entity, meaning that it does not pay income tax. Instead, all income, deductions, and credits are passed through to investors.
Kinder Morgan’s stock was trading at $24.8 on Wednesday, a few points below its all-time high of $25.36. It has risen by 256% from its lowest point in 2020, while its HypeIndex figure has risen to 194%.

Positive hype
Kinder Morgan has generated a lot of positive hype because of its stock performance. It has jumped by over 40% this year, outperforming the S&P 500 and Nasdaq 100 indices.
The company has reported strong financial results even as natural gas prices have remained substantially lower than where they were a few years ago.
Kinder Morgan and other leveraged companies are benefiting as interest rates start falling. The Fed has hinted that it will deliver more cuts in the coming months, a move that will lower its interest spending.
Kinder Morgan’s backlog has continued rising and has moved to $5.2 billion. Most of this backlog is in the natural gas business followed by gathering and processing.
Its pipeline has had a strong utilization metric, which stood at 87%, which is a sign of high demand.
Analysts believe that Kinder Morgan’s business will continue doing well, with the current quarter’s revenue expected to come in at $4.12 billion. Its annual revenue will be $15.5 billion.
KMI has a dividend yield of 4.65%, meaning that it may attract investors as bond yields start falling.
Negative hype
Kinder Morgan is an overvalued company since it has a forward price-to-earnings ratio of 21. This ratio is similar to that of the S&P 500 index, which has faster growth metrics.
KMI has a market cap of over $55 billion, which is much higher than its annual net income of $2.5 billion.
Its stock is at the same level as the average analyst estimates, meaning that there is little upside for the company.
Its balance sheet is not the best since it has $110 million in cash against $1.8 billion in short-term debt, $30 billion in long-term debt, and $2.4 billion in non-current liabilities.
KMI has a long track record of underperforming its top MLP competitors like Energy Transfer, Enterprise Products Partners, and Williams Companies.
Kinder Morgan stock summary

The weekly chart shows that the Kinder Morgan share price has jumped sharply in the past few months. It has remained above the key resistance point at $17.3, its highest point in June 2022, the upper side of the ascending triangle.
The stock has remained above all moving averages. However, oscillators like the Relative Strength Index (RSI) and the Stochastic Oscillator have moved to the overbought level.
Therefore, while the upside is possible, there is a risk that it will have a pullback as investors start to take profit. If this happens, the next point to watch will be at $22.
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