We assign a fundamental rating of 3 out of 10 to KMI. KMI was compared to 207 industry peers in the Oil, Gas & Consumable Fuels industry. While KMI is still in line with the averages on profitability rating, there are concerns on its financial health. KMI has a expensive valuation and it also scores bad on growth. Finally KMI also has an excellent dividend rating.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

KMI had positive earnings in the past year.
In the past year KMI had a positive cash flow from operations.
Of the past 5 years KMI 4 years were profitable.
Of the past 5 years KMI 4 years had a positive operating cash flow.

1.2 Ratios

Looking at the Return On Assets, with a value of 3.75%, KMI is in line with its industry, outperforming 54.59% of the companies in the same industry.
With a Return On Equity value of 8.83%, KMI perfoms like the industry average, outperforming 58.45% of the companies in the same industry.
KMI has a Return On Invested Capital of 5.23%. This is comparable to the rest of the industry: KMI outperforms 45.89% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for KMI is significantly below the industry average of 21.94%.
The last Return On Invested Capital (5.23%) for KMI is above the 3 year average (5.16%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	3.75%
ROE	8.83%
ROIC	5.23%

ROA(3y)3.53%

ROA(5y)2.65%

ROE(3y)8.2%

ROE(5y)6.14%

ROIC(3y)5.16%

ROIC(5y)4.97%

1.3 Margins

KMI has a Profit Margin of 16.54%. This is in the better half of the industry: KMI outperforms 69.57% of its industry peers.
In the last couple of years the Profit Margin of KMI has remained more or less at the same level.
The Operating Margin of KMI (27.68%) is better than 69.08% of its industry peers.
KMI's Operating Margin has been stable in the last couple of years.
KMI's Gross Margin of 49.12% is fine compared to the rest of the industry. KMI outperforms 60.39% of its industry peers.
In the last couple of years the Gross Margin of KMI has declined.

		Industry Rank	Sector Rank
OM	27.68%
PM (TTM)	16.54%
GM	49.12%

OM growth 3Y3.62%

OM growth 5Y-0.52%

PM growth 3Y17.31%

PM growth 5Y0.85%

GM growth 3Y3.41%

GM growth 5Y-1.53%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), KMI is destroying value.
KMI has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

2.2 Solvency

Based on the Altman-Z score of 1.12, we must say that KMI is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.12, KMI is in line with its industry, outperforming 46.38% of the companies in the same industry.
The Debt to FCF ratio of KMI is 15.03, which is on the high side as it means it would take KMI, 15.03 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of KMI (15.03) is comparable to the rest of the industry.
A Debt/Equity ratio of 1.02 is on the high side and indicates that KMI has dependencies on debt financing.
KMI has a worse Debt to Equity ratio (1.02) than 69.08% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	1.02
Debt/FCF	15.03
Altman-Z	1.12

ROIC/WACC0.64

WACC8.2%

2.3 Liquidity

KMI has a Current Ratio of 0.63. This is a bad value and indicates that KMI is not financially healthy enough and could expect problems in meeting its short term obligations.
KMI has a worse Current ratio (0.63) than 76.33% of its industry peers.
A Quick Ratio of 0.49 indicates that KMI may have some problems paying its short term obligations.
The Quick ratio of KMI (0.49) is worse than 83.57% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	0.63
Quick Ratio	0.49

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 12.07% over the past year.
KMI shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 7.87% yearly.

EPS 1Y (TTM)12.07%

EPS 3Y4.17%

EPS 5Y7.87%

EPS Q2Q%21.88%

Revenue 1Y (TTM)N/A

Revenue growth 3YN/A

Revenue growth 5YN/A

Sales Q2Q%14.39%

3.2 Future

The Earnings Per Share is expected to grow by 7.58% on average over the next years.
Based on estimates for the next years, KMI will show a small growth in Revenue. The Revenue will grow by 5.80% on average per year.

EPS Next Y6.62%

EPS Next 2Y7.42%

EPS Next 3Y5.93%

EPS Next 5Y7.58%

Revenue Next Year4.75%

Revenue Next 2Y5.41%

Revenue Next 3Y5.62%

Revenue Next 5Y5.8%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.

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4. Valuation

4.1 Price/Earnings Ratio

KMI is valuated rather expensively with a Price/Earnings ratio of 22.84.
Compared to the rest of the industry, the Price/Earnings ratio of KMI is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 27.32. KMI is around the same levels.
With a Price/Forward Earnings ratio of 21.42, KMI is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of KMI is on the same level as its industry peers.
KMI's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 24.32.

		Industry Rank	Sector Rank
PE	22.84
Fwd PE	21.42

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, KMI is valued a bit more expensive than 64.73% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of KMI is on the same level as its industry peers.

		Industry Rank	Sector Rank
P/FCF	30.48
EV/EBITDA	13.78

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.

PEG (NY)3.45

PEG (5Y)2.9

EPS Next 2Y7.42%

EPS Next 3Y5.93%

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5. Dividend

5.1 Amount

KMI has a Yearly Dividend Yield of 4.09%, which is a nice return.
Compared to an average industry Dividend Yield of 3.75, KMI pays a bit more dividend than its industry peers.
KMI's Dividend Yield is rather good when compared to the S&P500 average which is at 1.83.

		Industry Rank	Sector Rank
Dividend Yield	4.09%

5.2 History

The dividend of KMI has a limited annual growth rate of 3.80%.
KMI has been paying a dividend for at least 10 years, so it has a reliable track record.
As KMI did not decrease their dividend in the past 5 years, we can say the dividend looks stable.

Dividend Growth(5Y)3.8%

Div Incr Years7

Div Non Decr Years8

5.3 Sustainability

95.47% of the earnings are spent on dividend by KMI. This is not a sustainable payout ratio.
KMI's earnings are growing more than its dividend. This makes the dividend growth sustainable.

DP95.47%

EPS Next 2Y7.42%

EPS Next 3Y5.93%

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KINDER MORGAN INC / KMI FAQ

What is the fundamental rating for KMI stock?

ChartMill assigns a fundamental rating of 3 / 10 to KMI.

What is the valuation status of KINDER MORGAN INC (KMI) stock?

ChartMill assigns a valuation rating of 2 / 10 to KINDER MORGAN INC (KMI). This can be considered as Overvalued.

How profitable is KINDER MORGAN INC (KMI) stock?

KINDER MORGAN INC (KMI) has a profitability rating of 5 / 10.

What are the PE and PB ratios of KINDER MORGAN INC (KMI) stock?

The Price/Earnings (PE) ratio for KINDER MORGAN INC (KMI) is 22.84 and the Price/Book (PB) ratio is 2.15.

What is the financial health of KINDER MORGAN INC (KMI) stock?

The financial health rating of KINDER MORGAN INC (KMI) is 1 / 10.