Key Morningstar Metrics for Kinder Morgan

Fair Value Estimate: $20.00
Morningstar Rating: 4 stars
Morningstar Economic Moat Rating: Narrow
Morningstar Uncertainty Rating: Medium

What We Thought of Kinder Morgan’s Earnings

Kinder Morgan’s

KMI first-quarter earnings and 2024 outlook met our expectations. 2024 EBITDA is expected to be about $8.16 billion, up 8% from 2023 and within striking distance of our $8.20 billion forecast. The growth comes despite weakness in US natural gas prices, helped by healthy results from storage, gathering volumes, and the recently completed STX Midstream deal.

That said, gathering volumes are trending lower than initially expected due to price weakness. Kinder expects to delay about 10% of its planned 2024 gathering and processing spending until the market can support it. After slightly increasing our long-term estimates for growth, we expect to increase our fair value estimate to $22 from $20 per share.

During Kinder’s earnings call, the management team highlighted how the electricity needs of artificial intelligence and data centers could drive demand for gas. AI could be the second leg of gas demand growth after US LNG exports.

Management cited estimates that gas demand will increase from 7 billion cubic feet per day to 16 bcf/d by 2030. This growth would imply AI will be around 15%-20% of electricity demand by that time, up from 2.5% in 2022. Gas would serve about 40% of the incremental demand, due to challenges with intermittency in solar and wind power. Kinder would remain well-positioned since it serves about 20% of the US power market and transports about 40% of US gas.