The energy industry has recently seen mixed opinions regarding the performance and future outlook of Kinder Morgan, Inc. (NYSE:KMI), a major pipeline company with significant ownership in North America’s largest natural gas network. According to Bloomberg.com, twelve research firms currently covering the stock have an average rating of “Hold.” Out of those twelve, one analyst has rated KMI as a sell recommendation, while two have issued a buy recommendation and seven believe holding the stock is best.
Despite this disparity in opinion, it is worth noting that several institutional investors and hedge funds have recently increased their ownership of KMI. Private Trust Co. NA alone bought an additional 1,026 shares in Q3 2016, increasing their stake by 4.3%. Similarly, WealthTrust Axiom LLC raised their holdings by 2% during the same period.
Kinder Morgan’s dividend payout ratio (DPR) also sits at a towering 99.11%, suggesting that the company may soon need to re-think its current dividend strategy if it intends to keep paying shareholders at its current rate. The quarterly dividend paid out on February 15th delivered $0.2775 per share to those with a record on January 31st—but even at that rate, the annual yield was still an impressive 6.25%.
Undoubtedly investors will continue to monitor Kinder Morgan’s operations over coming quarters with heightened scrutiny due to its elevated DPR and muted recommendations from analysts. With an average price objective among various experts set at $20.80—a comparatively conservative target given where KMI shares are trading currently—it will be interesting to see whether Kinder Morgan can deliver improved results that justify more aggressive ratings from analysts and lead them towards issuing revised bullish recommendations for this well known Natural Gas Pipeline giant?
Insider Trading and Positive Ratings: The Story of Kinder Morgan, The Pipeline Giant
Kinder Morgan: The Pipeline Giant and its Insider Traders
Kinder Morgan (NYSE:KMI) is a renowned energy infrastructure company operating in North America, which includes owning and managing one of the largest natural gas pipelines network in the region. Despite fluctuations in oil prices and industry regulations, Kinder Morgan has remained consistent in generating impressive earnings with a net profit margin of 13.27%. These figures have not gone unnoticed; as such, several research firms have increased their price targets on KMI stock.
Morgan Stanley raised their price target from $20.00 to $21.00 but gave KMI stock an “underweight” rating while Barclays gave the stock an “equal weight” rating, increasing its price objective to $21.00 also. In addition, Sanford C. Bernstein upgraded KMI’s rating from “market perform” to “outperform,” lifting their target price for the stock to $22.00 from $19.00.
However, there was some insider trading that caught investors’ attention recently when two senior VPs sold thousands of shares worth millions of dollars. On February 15th & January 25th respectively, Anthony B. Ashley sold 13,232 shares worth $240,028 while Vice President John W. Schlosser sold 1,500 shares at a total value of $27,660 as reported through SEC filings.
Despite these insider sales and increased scrutiny by analysts after disappointing Q4 2016 earnings results that missed analysts’ estimates by about $300 million on revenue figures coming in below expectations at just over $4 billion versus an estimated $4.8 billion; Kinder Morgan remains optimistic about its future dividends payouts after announcing a quarterly dividend payment last February 15th amounting to $0.2775 per share yielding an annualized payout of around 6%.
Investors should take note that despite its impressive financials and recent positive ratings reviews, KMI stock is currently lower than its 12-month high of $20.20, trading at $17.77 on Friday with a market capitalization hovering around the $40 billion mark. Leading industry analysts have forecasted EPS for Kinder Morgan to be at 1.10 for the fiscal year 2017 which, if realized, represents a five cent increase on the previous year.
Overall, Kinder Morgan has established itself as one of the top energy infrastructure companies in North America and is determined to continue delivering value to its shareholders by consistently generating earnings despite volatile market conditions and increased regulatory scrutiny. Despite some insider trading activity, it remains a stock worth considering for investors looking for exposure to this sector.
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