Kinder Morgan Earnings: New SNG Project to Serve Growing Power Demand
We still view Kinder as one of the better-positioned firms to capture AI and data center demand out to 2030.
Key Morningstar Metrics for Kinder Morgan
- Fair Value Estimate: $22.00
- Morningstar Rating: 3 stars
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Medium
What We Thought of Kinder Morgan’s Earnings
Kinder Morgan’s KMI second-quarter earnings were solid, in our view. We see no reason to change our fair value estimate of $22 per share or our narrow moat rating. The firm reaffirmed 2024 guidance of $8.16 billion in EBITDA, essentially matching our view, which is up 8% over 2023. Due to its expansive footprint of assets, we still view Kinder as one of the better-positioned US midstream firms to capture artificial intelligence and data center demand out to 2030, as well as higher US LNG exports and Mexican natural gas exports.
The biggest news in the quarter was the successfully binding open season on the proposed South System Expansion 4, designed to add 1.2 billion cubic feet per day of capacity to Southern Natural Gas Pipeline’s South Line capacity in the Southeast. We think it’s a particularly efficient project designed to yield high returns, given its brownfield status (meaning it has a relatively lower cost than a newbuild greenfield effort). The project also serves growing power generation needs in the Southeast, which includes AI and data center demand. The $3 billion project is due online in 2028 and comprises looping and compression additions to the SNG and Elba Express pipeline systems.
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