Kinder Morgan’s (NYSE: KMI) performance
The report that Wells Fargo (NYSE:WFC) issued regarding Kinder Morgan Inc. (NYSE: KMI) shows how it may be evaluated after the master limited partnership (MLP) acquisition. The company has a dividend yield of about 4.5%. Kinder Morgan (NYSE:KMI) has officially issued guidance to show its investors how Q1 of 2015 will have a yield of 5.2%.
Analysts state the dividend growth to be 10% annually which will be responsible for increasing shares over time. Wells Fargo (NYSE:WFC) also forecasted that Kinder Morgan (NYSE:KMI) may have an increase in dividends with a compound growth each year at a constant 9% rate which will last from 2015 to 2019.
Kinder Morgan (NYSE:KMI) is said to trade with a discount due to its 10% growth rate. This is a good rate when we compare it with its peers as the median is well below at 7.9%. However, there is no direct comparable member in the peer group though they may be compared in an aggregate.
Wells Fargo’s (NYSE:WFC) opinion on the matter is that Kinder Morgan (NYSE:KMI) shows an attractive investment. Hence it updated the rating of Kinder Morgan (NYSE:KMI) to Outperform. The valuation was raised from $6 going to $46 and then $48 for each share. A positive result of this is that the highest price target by the analysts at Thomson Reuters came up to $50.
The analysts Praneeth Satish, Michael Blum and Sharon Lui reported that the underperformance from the post-merger in August which went down 8%. This is an attractive situation for all the investors in the market. These analysts displayed how Kinder Morgan (NYSE:KMI) was evaluated and they stated that the valuation range depends on their three stage discount model of dividends. This shows a required rate of return amounting to 8% with a growth rate for the long term as 2.5%. The target yield is 4.3%.
Risks to this trading may include pending acquisition completions of KMR, EPB and KMP. There are also declines in the prices of crude oil, financing risks and not to mention increases in interest rates. The whole valuation is based on the future expectation that the market will in turn value Kinder Morgan (NYSE:KMI) with a yield against the growth basis with the roll-up transaction.
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The company’s shares shot up 0.8% amounting to $38.50. The consensus price target was $43.67. Kinder Morgan’s (NYSE:KMI) stock includes a 52 week range which is from $30.81 to about $42.49. The company’s market cap is under $40 billion. The properties of the company fell short. They will be a part of the company soon however they trade individually as of now on the New York Stock Exchange. After the call, there gains were as follows:
- El Paso Pipeline Partners L.P. (NYSE: EPB) shot up but on a lower level compares to other gains amounting to $40.40 making it to 0.5%.
- Kinder Morgan Energy Partners L.P. (NYSE: KMP) went up by 0.6% amounting to $93.80.
- Kinder Morgan Management LLC (NYSE: KMR) also went up by 0.6% amounting to $94.69.