The firm said it began coverage on the North American energy infrastructure company based on its belief that Kinder Morgan is a large scale market leader.
Shares of Kinder Morgan are down by 0.30% to $39.23 in late morning trading on Tuesday.
"Kinder offers a differentiated advantage to customers with its high connectivity in several production areas with connections to end market demand. The company is positioned well for further growth with a substantial backlog of organic projects backed by customer commitments," SunTrust said in an analyst note.
"Additionally, the firm's fee-based model mitigates downside risk, particularly attractive in the current environment," the analyst note continued.
Based in Houston TX., Kinder Morgan is the fourth largest energy company in North America. The company's pipelines transport natural gas, gasoline, crude oil, CO2 and other products.
Separately, TheStreet Ratings team rates KINDER MORGAN INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate KINDER MORGAN INC (KMI) a BUY. This is driven by a number of 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 increase in net income, expanding profit margins, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 49.5% when compared to the same quarter one year prior, rising from $287.00 million to $429.00 million.
- 46.65% 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 11.92% is above that of the industry average.
- Net operating cash flow has increased to $1,256.00 million or 12.34% when compared to the same quarter last year. In addition, KINDER MORGAN INC has also vastly surpassed the industry average cash flow growth rate of -53.28%.
- Despite the weak revenue results, KMI has outperformed against the industry average of 38.6%. Since the same quarter one year prior, revenues fell by 11.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite 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.
- You can view the full analysis from the report here: KMI Ratings Report