Shares are falling 0.51% to $39.28 in Wednesday's late morning trading session.
Kinder Morgan is a midstream energy company in North America, operating approximately 80,000 miles of pipelines and 180 terminals.
The last time Kinder Morgan (KMI) was selling at bargain prices, it was because Barron's published a negative article warning of the stock's imminent meltdown. More than a year later, those bearish predictions still haven't come true.
Now Kinder is at a discount again, and it's because Barron's has published a second negative article that uses more or less the same arguments as before.
I personally think the stock is a buy, but it's worth addressing some of the concerns raised by Barron's widely read coverage.
Although Kinder is no longer a master limited partnership, the company continues to emphasize distributable cash flow, a metric typically only used by MLPs. A major concern is that KMI won't be able to continue paying its dividend because the company has neither the earnings nor the operating cash flow to maintain payouts.
While that's true for Kinder, it's also true for many energy companies. It's a capital-intensive business, and both earnings and operating cash flow subtract depreciation and amortization allowances (both of which are non-cash items).
- Casey Hoerth 'Oil's Well at Pipeline Firm Kinder Morgan' Originally Published on 6/17/15/ on Real Money.
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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."
You can view the full analysis from the report here: KMI Ratings Report