What to Expect When Kinder Morgan Energy Partners (KMP) Reports Third-Quarter Earnings

NEW YORK (TheStreet) -- Shares of Kinder Morgan Energy Partners  (KMP)  were up 0.72% to $84.95 in morning trading Wednesday ahead of the company's scheduled third-quarter earnings report after the market close. Here's what analysts are expecting from the company.

The consensus estimate calls for Kinder Morgan Energy Partners to report earnings of 64 cents a share on revenue of $3.57 billion. In the third quarter last year, the company posted earnings of 51 cents a share, less than the consensus estimate of 62 cents a share. Revenue totaled $3.279 billion, which handily beat analysts' estimate of $3.059 billion.

In the second quarter of 2014, Kinder Morgan Energy Partners reported earnings of 49 cents a share, which came up short of the consensus estimate of 56 cents a share. Revenue totaled $3.577 billion, which surpassed analysts' expectations of $3.344 billion.

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Billionaire Richard Kinder announced a $44 billion consolidation plan earlier this year to bring Kinder Morgan (KMI) , Kinder Morgan Energy Partners, Kinder Morgan Management (KMR) and El Paso Pipeline Partners  (EPB) under one umbrella.

Separately, TheStreet Ratings team rates KINDER MORGAN ENERGY -LP as a "buy" with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate KINDER MORGAN ENERGY -LP (KMP) a BUY. This is driven by several positive factors, 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, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • The revenue growth came in higher than the industry average of 2.8%. Since the same quarter one year prior, revenues rose by 18.6%. 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.
  • 39.03% is the gross profit margin for KINDER MORGAN ENERGY -LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.47% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $1,175.00 million or 20.02% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -4.80%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • KINDER MORGAN ENERGY -LP 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. 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 ENERGY -LP increased its bottom line by earning $3.80 versus $1.64 in the prior year. For the next year, the market is expecting a contraction of 31.3% in earnings ($2.61 versus $3.80).
  • You can view the full analysis from the report here: KMP Ratings Report

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