ET - Kinder Morgan: I Am Bullish On Midstream But Not In This Case
2024-06-22 10:15:47 ET
Summary
- Kinder Morgan is one of the largest energy infrastructure companies in the U.S. that since 2023 has underperformed its peers.
- Currently, the valuation of KMI is quite rich making it more difficult to deliver outsized total returns going forward.
- To justify the premium, KMI has to carry more attractive growth profile and / or have a stronger capital structure. Nothing of this is the case here.
- In this article I explain in a more detail why, in my opinion, investors should avoid going long KMI.
Kinder Morgan (NYSE: KMI ) is one of the largest publicly traded energy infrastructure players with a market cap of roughly $44 billion. At its core KMI is rather similar to other midstream companies (or MLPs) such as Energy Transfer LP (NYSE: ET ), Enterprise Products Partners (NYSE: EPD ) and Enbridge (NYSE: ENB ), where the bulk of cash flows are generated from relatively irreplicable and durable infrastructure assets. In KMI's case there is a more pronounced exposure towards natural gas segment, which accounts for 64% of the EBITDA generation leaving the remainder for mostly refined products and RNG....
Kinder Morgan: I Am Bullish On Midstream, But Not In This Case