On Mar 18, 2014, Zacks Investment Research downgraded
Kinder Morgan Inc.
) to a Zacks Rank #3 (Hold) from a Zacks Rank #2 (Buy).
Why the Downgrade?
Kinder Morgan is the largest midstream and the third largest
energy company in North America with a combined enterprise value
of approximately $100 billion. It owns an interest in or operates
approximately 80,000 miles of pipelines and 180 terminals. Its
pipelines transport natural gas, gasoline, crude oil, CO2 and
other products, and its terminals store petroleum products and
chemicals and handle such products as ethanol, coal, petroleum
coke and steel.
Like all other oil and gas majors, Kinder Morgan remains
vulnerable to volatile crude oil and
, an imbalance between supply and demand for its products as well
as rising interest rates. Such factors can hurt the company's
volumes and margins.
Moreover, Kinder Morgan's distribution growth prospects are
closely linked to the successful completion of organic growth
projects, which in turn might be adversely affected by
operational hindrance, cost inflation and overruns, and delays in
Additionally, although Kinder Morgan possesses solid cash flow
stability from quality pipeline and storage assets, we believe
that higher gasoline and feedstock prices will marginally
increase the risk profile of its refined product pipeline assets.
Even with its diversified set of assets, Kinder Morgan has little
exposure to the shale oil infrastructure which is enjoying a
Over the past one month, the company has seen a negative trend in
earnings estimate revision. For the first quarter of 2014, two
estimates moved down in the past 30 days, with no upward
revision. For the full year, two estimates moved down while only
one estimate was revised upward.
Other Stocks to Consider
Some better-ranked stocks in the broader energy sector include
Range Resources Corporation
Vermilion Energy Inc.
Patterson-UTI Energy Inc.
). All the three stocks hold a Zacks Rank #1 (Strong Buy).
KINDER MORGAN (KMI): Free Stock Analysis
PATTERSON-UTI (PTEN): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
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