The oil and gas industry has recovered steadily after being hit by COVID-19, with the relaxation of movement restrictions lifting fuel consumption globally. Energy infrastructure company Kinder Morgan, Inc. (NYSE: KMI) has been relatively unaffected by the pandemic and has maintained decent cash flows during the crisis.
Kinder Morgan operates probably the largest natural gas distribution network in North America. KMI is one of the cheapest stocks in the industry, so it makes sense to keep it on investors’ watch lists. The stock experienced many ups and downs in the past six months but traded slightly above its 52-week average this week.
Though the majority of analysts see an increase in the value this year, they have assigned a hold rating on the stock. Considering the company’s mixed financial performance in recent quarters and the challenges facing the energy industry, it is not a very safe investment right now.
The company has raised its dividend consistently over the years, which is likely to attract more income investors to it. Also, the management is bullish on its share repurchase program for 2022 and beyond, citing the steady cash flows — a trend that is expected to continue in the near future.
The impact of oil price fluctuations on Kinder Morgan’s business is relatively lesser compared to upstream and downstream companies, thanks to its continued focus on natural gas that is expected to stay in high demand. Taking a cue from the positive outlook on the gas sector, the company has been investing in new projects.
From Kinder Morgan’s Q3 2021 earnings conference call:
“Overall, we’re seeing increased natural gas transport volumes primarily from LNG exports, seeing increased gas gathering volumes in the Eagle Ford and the Haynesville on a sequential basis. Product volumes are recovering versus 2020, however road fuels were down about 3% versus pre-pandemic levels versus flat with pre-pandemic levels last quarter as we likely saw an impact from the Delta variant.”
Q4 Report Due
Net profit increased to $0.22 per share in the third quarter, excluding special items, but missed expectations, as it did in the previous quarter when the company had reported a net loss. At $3.8 billion, revenues were up 31% year-over-year. Margins came under pressure from elevated operating costs. Kinder Morgan’s fourth-quarter report is due on January 26 after the regular trading hours.
The stock made modest gains in pre-market trading on Wednesday, after closing the previous session at $17.43. KMI has gained about 9% since the beginning of the year.
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