Kinder Morgan Inc.
), one of the largest midstream energy companies in North
America, reported lower-than-expected third-quarter 2013 earnings
owing to significant increase in operating expenses. The
third-quarter 2013 earnings from continuing operations stood at
27 cents a share, failing to meet the Zacks Consensus Estimate of
EL PASO PIPELIN (EPB): Free Stock Analysis
KINDER MORGAN (KMI): Free Stock Analysis
KINDER MORG ENG (KMP): Free Stock Analysis
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However, the quarterly earnings increased 28.6% from the
year-earlier profit level of 21 cents per share. Improved
Kinder Morgan Energy Partners LP
El Paso Pipeline Partners LP
) aided the results. KMI owns the general partner (GP) interest
and incentive distribution rights (IDRs) of KMP and El Paso
Total revenue for the quarter increased 27.3% year over year to
$3,654.0 million. The reported figure also surpassed the Zacks
Consensus Estimate of $3,650.0 million by 0.1%.
Dividend and Share Repurchases
KMI raised its quarterly dividend by 14% to 41 cents a share
($1.64 per share annualized) from 36 cents ($1.44 per share
annualized) in the third quarter of 2012. Moreover, the new
dividend increased by 2.5% from second-quarter 2013 dividend of
40 cents a share ($1.60 per share annualized). The hiked dividend
will be paid on Nov 15, 2013, to shareholders of record on Oct
KMI expects its full-year 2013 dividend to be $1.60 per share,
representing a hike of 14.3% from the dividend declared in 2012.
The company expects its growth for the year 2013 will be driven
by KMP and El Paso Pipeline Partners.
Moreover, the board of director has authorized an additional
$250.0 million shares and warrant buyback plan.
Total expenses in the quarter were $2613.0 million, representing
a 29.5% increase from $2,018.0 million in the third quarter of
Operating expenses for the quarter came in at $1,958.0 million,
representing a significant increase of 45.6% as compared to
$1,345.0 million posted in the year-ago period.
Operating income came in at $1,041.0 million versus $852.0
million in the year-ago quarter. Operating margin was 28.5%
compared with approximately 29.7% in the year-ago quarter.
Cash available for dividend payments was $424.0 million in the
third quarter of 2013, an increase of 17.1% from $362.0 million
in the comparable quarter last year. As of Sep 30, 2013, KMI
reported $137.0 million of cash and cash equivalents, while
long-term debt was $7,724.0 million.
KMI holds a Zacks Rank #1 (Strong Buy), implying that it is
expected to significantly outperform the broader U.S. equity
market over the next one to three months.
Apart from KMI one can look at other energy stock like
Stone Energy Corp.
) that offers value. The firm also sports a Zacks Rank #1 (Strong