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Today's Water-Logged And Getting Wetter Stock: Kinder Morgan (KMI)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Kinder Morgan ( KMI) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Kinder Morgan as such a stock due to the following factors:

  • KMI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $118.1 million.
  • KMI has traded 3.8 million shares today.
  • KMI traded in a range 229.1% of the normal price range with a price range of $1.06.
  • KMI traded below its daily resistance level (quality: 355 days, meaning that the stock is crossing a resistance level set by the last 355 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on KMI:

Kinder Morgan, Inc. owns and operates energy transportation and storage assets in the United States and Canada. The company operates in six segments: Natural Gas Pipelines, Products Pipelines KMP, CO2 KMP, Terminals KMP, Kinder Morgan Canada KMP, and Other. The stock currently has a dividend yield of 4.6%. KMI has a PE ratio of 33.9. Currently there are 6 analysts that rate Kinder Morgan a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Kinder Morgan has been 6.2 million shares per day over the past 30 days. Kinder Morgan has a market cap of $36.8 billion and is part of the basic materials sector and energy industry. The stock has a beta of 0.65 and a short float of 1.6% with 3.02 days to cover. Shares are down 0.4% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Kinder Morgan as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 30.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in 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 43.0% when compared to the same quarter one year prior, rising from $200.00 million to $286.00 million.
  • 40.15% 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 7.61% compares favorably to the industry average.
  • KINDER MORGAN INC's earnings per share declined by 12.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, KINDER MORGAN INC increased its bottom line by earning $1.22 versus $0.55 in the prior year. For the next year, the market is expecting a contraction of 16.8% in earnings ($1.02 versus $1.22).
  • The debt-to-equity ratio is very high at 2.71 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.35, which clearly demonstrates the inability to cover short-term cash needs.

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