Kinder Morgan (KMI) to Post Q2 Earnings: Is a Beat in Store?

Kinder Morgan Inc. KMI is scheduled to report second-quarter 2020 earnings on Jul 22.  

In the last reported quarter, the leading energy infrastructure company’s earnings met the Zacks Consensus Estimate on increased average tariffs on its refined product pipeline. Notably, Kinder Morgan’s earnings missed the Zacks Consensus Estimate only once and met the same thrice in the trailing four quarters, the average negative surprise being 1.09%. This is depicted in the graph below:

Kinder Morgan, Inc. Price and EPS Surprise


Kinder Morgan, Inc. Price and EPS Surprise

Kinder Morgan, Inc. price-eps-surprise | Kinder Morgan, Inc. Quote

Let’s see how things have shaped up prior to this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for the company’s second-quarter earnings per share of 12 cents has witnessed three upward and one downward revision over the past 60 days. The estimated figure suggests a decline of 45.5% from the prior-year reported number.

The consensus estimate for second-quarter revenues of $2.9 billion indicates a 9.5% decline from the year-ago reported figure.

What Does the Zacks Model Say

Our proven model predicts an earnings beat for Kinder Morgan this time around. The combination of a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Kinder Morgan has an Earnings ESP of +54.17%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Kinder Morgan currently carries a Zacks Rank #3.

Factors to Consider

Being a leading North American midstream energy firm, Kinder Morgan is likely to have generated stable fee-based revenues in the second quarter from its gigantic natural gas transportation network, spreading across roughly 70,000 miles.

Notably, we expect daily transportation volumes of natural gas to have grown year over year in the June quarter. The Zacks Consensus Estimate for transportation volumes through natural gas pipeline is pegged at 39,391 billion British thermal units per day (BBtu/D), compared with the year-ago quarter’s 34,790 BBtu/D.

Importantly, Kinder Morgan’s business model is not significantly exposed to the coronavirus-induced commodity price volatility. This is because the company’s midstream assets are booked by the shippers for long term. Thus, it can be said that the midstream player’s overall operations are likely to have been relatively less affected by the pandemic as compared to upstream energy majors.

Other Stocks to Consider

Investors can consider the following players from the energy space that also have the right combination of elements to post an earnings beat in the to-be-reported quarter:

Baker Hughes Company BKR has an Earnings ESP of +25.00% and is a Zacks #3 Ranked player. The company is scheduled to release second-quarter results before the opening bell on Jul 22. You can see the complete list of today’s Zacks #1 Rank stocks here.

BP plc BP has an Earnings ESP of +2.70% and a Zacks Rank of 3. It is scheduled to report second-quarter results on Aug 4.

ConocoPhillips COP has an Earnings ESP of +16.75% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 30, before the opening bell.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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