Morningstar

Kinder Morgan Earnings: New SNG Project to Serve Growing Power Demand

We still view Kinder as one of the better-positioned firms to capture AI and data center demand out to 2030.

In this photo illustration a Kinder Morgan logo is seen on a smartphone screen.
Securities In This Article
Kinder Morgan Inc Class P
(KMI)

Key Morningstar Metrics for Kinder Morgan

What We Thought of Kinder Morgan’s Earnings

Kinder Morgan’s KMI second-quarter earnings were solid, in our view. We see no reason to change our fair value estimate of $22 per share or our narrow moat rating. The firm reaffirmed 2024 guidance of $8.16 billion in EBITDA, essentially matching our view, which is up 8% over 2023. Due to its expansive footprint of assets, we still view Kinder as one of the better-positioned US midstream firms to capture artificial intelligence and data center demand out to 2030, as well as higher US LNG exports and Mexican natural gas exports.

The biggest news in the quarter was the successfully binding open season on the proposed South System Expansion 4, designed to add 1.2 billion cubic feet per day of capacity to Southern Natural Gas Pipeline’s South Line capacity in the Southeast. We think it’s a particularly efficient project designed to yield high returns, given its brownfield status (meaning it has a relatively lower cost than a newbuild greenfield effort). The project also serves growing power generation needs in the Southeast, which includes AI and data center demand. The $3 billion project is due online in 2028 and comprises looping and compression additions to the SNG and Elba Express pipeline systems.

Kinder Morgan Stock vs. Morningstar Fair Value Estimate

Source: Morningstar Direct.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Stephen Ellis

Strategist
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Stephen Ellis is a strategist, AM Resources, for Morningstar*. He covers US and Canadian midstream companies.

Before joining Morningstar in 2007, Ellis worked as a freelance analyst for The Motley Fool and worked in project and financial analysis for Environmental Systems Research Institute (ESRI), a supplier of geographic information system software and geodatabase management applications. Before assuming his current role in 2017, he was director of equity research for financial services and a senior equity analyst. He is also a former editor of the Morningstar Opportunistic Investor newsletter, and a former member of the Economic Moat Committee, a group of senior members of the equity research team responsible for reviewing all Economic MoatTM ratings issued by Morningstar. Ellis is a former member of Morningstar’s China Economic Committee, which provided research on the long-term outlook for the Chinese economy.

Ellis holds a bachelor’s degree in business administration from the University of Redlands. He also holds a master’s degree in business administration from the University of Redlands.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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