Why TheStreet Reiterates Kinder Morgan (KMI) as a "Buy"

Tickers in this article: KMI

NEW YORK (TheStreet) -- Despite losses over Wednesday's session, TheStreet Ratings team reiterates Kinder Morgan KMI as a "buy" with a ratings score of B. 

By late afternoon, shares of the oil transportation company unloaded 4.4% to $33.92 on a day undoubtedly turbulent for oilers. Earlier, Marathon Petroleum , Hess  and Phillips 66 reported mixed earnings, causing the former to gain 4%, the latter to splutter 1.6%, and Hess to remain unchanged. 

The team has this to say about their Kinder Morgan recommendation:

"We rate KINDER MORGAN INC (KMI) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, growth in earnings per share, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 25.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 53.6% when compared to the same quarter one year prior, rising from $220.00 million to $338.00 million.
  • KINDER MORGAN INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KINDER MORGAN INC reported lower earnings of $1.15 versus $1.22 in the prior year. This year, the market expects an improvement in earnings ($1.43 versus $1.15).
  • 42.33% is the gross profit margin for KINDER MORGAN INC which we consider to be strong. Regardless of KMI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KMI's net profit margin of 8.72% compares favorably to the industry average.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, KINDER MORGAN INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.