The oil market is facing a steep global surplus, and although data indicates that U.S. production has declined in recent weeks, U.S. inventory remains high, Reuters reports.
"Even if speculators are focusing on the decrease in U.S. production at present, it is important not to forget that U.S. crude oil stocks are still currently 28%... higher than usual," Commerzbank analysts said in a report, according to Reuters.
Exacerbating the supply glut is weakened global demand due in large part to an economic slowdown in China, the world's second-largest oil consumer.
WTI crude is down 3.15% to $45.21 per barrel, while Brent crude is decreasing 1.37% to $48.25 per barrel this afternoon, according to the CNBC.com index.
Kinder Morgan is is an energy infrastructure and energy company based in Houston.
Separately, 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. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, 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:
- 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 17.3% when compared to the same quarter one year prior, going from $284.00 million to $333.00 million.
- 43.66% 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 9.61% is above that of the industry average.
- Despite the weak revenue results, KMI has outperformed against the industry average of 34.6%. Since the same quarter one year prior, revenues fell by 12.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The share price of KINDER MORGAN INC has not done very well: it is down 19.15% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- KINDER MORGAN INC's earnings per share declined by 44.4% in the most recent quarter compared to 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 18.7% in earnings ($0.77 versus $0.95).
- You can view the full analysis from the report here: KMI