Kinder Morgan Earnings: Firm Wraps Up Solid 2024, Reaffirms 2025 Growth Outlook

Key Morningstar Metrics for Kinder Morgan

• Fair Value Estimate: $22.00
• Morningstar Rating: ★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Medium

What We Thought of Kinder Morgan’s Earnings

Kinder Morgan KMI reported adjusted earnings of $1.15 per share in 2024, up 7% from 2023. Full-year adjusted EBITDA was up 5% year over year to $7.9 billion, slightly lower than management’s $8.2 billion budget and our estimate at the beginning of 2024.

Why it matters: Kinder’s natural gas pipeline business remains its key earnings and value driver, generating about two-thirds of its cash flow and most of its growth. Weak commodity prices resulted in mostly flat transport volumes, but acquisitions and expansions lifted gathering volumes and natural gas liquids year over year. This demonstrates the versatility of Kinder’s network.

• Management reaffirmed its $8.3 billion adjusted EBITDA and $1.27 adjusted EPS guidance for 2025, as they announced in December.
• Kinder increased its project backlog to $8.1 billion, up from $3 billion at the end of 2023, and suggested opportunities for $2.5 billion of growth investment annually in the next several years. This could represent an upside to our 5% average annual earnings growth forecast if Kinder realizes that investment.

The bottom line: We are reaffirming our fair value estimate of $22 per share and narrow moat rating for Kinder.

• The stock trades at a 42% premium to our fair value estimate as of Jan. 22 after nearly doubling during the past 12 months.

Big picture: We still assume 5% average annual EBITDA growth in the next few years, based on Kinder’s backlog of projects and our bullish outlook for US gas demand from power generation and LNG exports.

• Kinder plans to pay an annualized dividend of $1.17 per share in 2025, up from $1.15 in 2024. We expect dividend growth will remain pedestrian, given Kinder’s alternative uses for capital to fund growth projects and manage the balance sheet.

Coming up: Kinder plans to release more details about its 2025 budget on Feb. 5. The firm also plans to close its $640 million Outrigger acquisition later in the first quarter.