Is it safe to buy Kinder Morgan stock as earnings miss estimates?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 21, 2021
  • Kinder Morgan shares on Thursday declined after announcing its most recent quarterly results.
  • The company reported its fiscal Q3 earnings Wednesday after markets closed, missing analyst estimates.
  • However, revenue for the quarter soared more than 30%, smashing expectations.

On Thursday, midstream oil and gas giant Kinder Morgan Inc. (NYSE:KMI) shares declined after announcing its most recent quarterly results. The company reported its fiscal Q3 earnings Wednesday after markets closed missing consensus Street estimates. However, revenue for the period skyrocketed amid surging oil prices, beating analyst expectations.

The company posted FQ3 non-GAAP earnings per share of $0.22, slightly coming short of the average for analyst estimates of $0.24. In addition, its GAAP EPS of $0.22 was 40.03 short of expectations, while revenue for the quarter increased by 30.8% to $3.82 billion, $590 million ahead of estimates.

Is it too early to buy KMI stock?

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From an investment perspective, Kinder Morgan shares trade at a reasonable trailing 12-month and forward P/E ratios of 24.87 and 18.28, respectively. Therefore, the stock could be an attractive option for value investors.

However, with analysts expecting its earnings per share to plunge by more than 95% this year before declining further by nearly 23% next year, KMI may not be a good option for growth investors.

Nonetheless, given Kinder Morgan’s exciting forward dividend yield of 5.79%, it could be a compelling option for dividend investors.

Source – TradingView

Technically, Kinder Morgan shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock has skyrocketed to the overbought conditions of the 14-day RSI.

Therefore, a short-term pullback could be imminent. As a result, investors could target potential pullback profits at about $16.93, or lower at $15.41, while $20.66 and $22.25 are solid resistance levels.

It could be time to take some profits

In summary, Kinder Morgan shares seem to have recently rallied into overbought conditions, thus creating an opportunity for a pullback.

Moreover, with analysts expecting its earnings to plunge this year before extending declines next year, Wednesday’s earnings miss could trigger a major pullback.

Therefore, it could be a perfect opportunity to take some profits off KMI ahead of a turbulent period.

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