NEW YORK (TheStreet) -- Kinder Morgan (KMI) - Get Free Report topped out back in late April and has nearly been cut in half over the subsequent seven months. Forward-looking traders may now want to probe the long side with an appropriate stop loss.
This chart of KMI, above, shows the long decline this year. There is a dead cross (the 50-day average going below the 200-day average) in early July and prices have remained below the 50-day and 200-day moving averages. The On-Balance-Volume (OBV) line just made a lower low along with the price action.
But -- there is always a "but" -- this time it is the momentum study in the lower panel. In November, KMI has made lower price lows, but the momentum study is also making higher lows. The higher lows mean that the rate of decline is slowing. Declines slow because prices have reached a level where they are now attractive to fundamental buyers.
This longer-term chart of KMI, above, also gives us a hint of a bottom. While the OBV line is still in a downtrend, it is holding above the 2014 lows. Second, on this time frame we can see a bigger bullish divergence between the lower lows in price and the equal lows on the momentum study. KMI will probably need some further base-building, but a close back above $25 should help the picture.
TheStreet Ratings team rates KINDER MORGAN INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate KINDER MORGAN INC (KMI) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and generally higher debt management risk.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 46.56% is the gross profit margin for KINDER MORGAN INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 5.01% is above that of the industry average.
- Despite the weak revenue results, KMI has outperformed against the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 13.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 42.21%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 75.00% compared to the year-earlier quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- KINDER MORGAN INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, KINDER MORGAN INC reported lower earnings of $0.95 versus $1.15 in the prior year. For the next year, the market is expecting a contraction of 20.0% in earnings ($0.76 versus $0.95).
- You can view the full analysis from the report here: KMI
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.