Children Morgan (NYSE: KMI) Recently reported solid fourth quarter results and published 2025 guidelines. The most striking thing about the report, however, was the increasing project delay that the company saw as a result of the demand for natural gas that exports to LNG (liquid natural gas), power plants and Artificial Intelligence (AI).
Let’s look at the pipeline The most recent results and guidance of the company to see if this is a good time to buy the shares.
One of the biggest things that came from the latest winning report from Kinder Morgan was the growing backlog of the company. The project backlog rose no less than 60% compared to the third quarter, from $ 5.1 billion to $ 8.1 billion. Projects related to natural gas accounted for 89% of the backlog.
In the EBITDA -Multiple in most of its projects (which is not associated with carbon dioxide improved oil extraction) will be 5.8 times. This means that for every $ 100 million it publishes, it expects to generate an incremental $ 17.24 million in EBITDA from these projects. MidStream projects are often done between 6x to 8x EBITDA MEIVERS, so this is a very solid expected return on these projects.
Kinder Morgan emphasized three major natural gax projects that it recently secured: South System Expansion 4, Mississippi Crossing and the Trident Intrastate Pipeline. The company said it is very well positioned for the trends that stimulate the natural gas volumes, with 45% of the LNG export question, 50% of the export from natural gas to Mexico, and 45% of the power demand in the Southwest desert, Texas , and southeast regions. It also noted that we are still in the very early innings of AI data centers and the power that is needed for them.
It sees the demand for natural gas in the US rising by 28 billion cubic foot (BCF) per day by 2030. This projection is very similar to the 28.5 BCF per day increase that natural gas producer Antero -Sources recently provided. Although the American natural gas consumption has gradually increased, these projections are close to the doubling of recent consumption within five years, which would be a huge increase.
With regard to the results, the adapted profit per share (EPS) from Kinder Morgan increased by 14% to $ 0.32. That was just below the expectations of the analysts for EPS of $ 0.34.
It adjusted EBITDA, meanwhile, rose by 7% to $ 2.06 billion. The distributable cash flow (DCF), which operates cash flow minus maintenance capital expenditure (Capex), climbed by 8% to $ 1.26 billion. The DCF per share increased by 10% to $ 0.57. Adapted EBITDA and DCF are two of the most common statistics used to evaluate midstream companies.
Kinder Morgan declared a dividend of $ 0.2875 per share, an increase of 2% compared to a year ago. The forward yield is approximately 3.8%. For the year it generated a free cash flow from $ 449 million after dividend payments, so the dividend is well covered.
The company ended the year with leverage (netto debt shared by an adapted EBITDA of 12 months) from 4 times. That is within the typical 3 times to 4.5 times varying for Midstream companies, and its own lever objective from 3.5 times to 4.5 times.
Looking ahead, Kinder Morgan predicts an increase of 4% in adapted EBITDA to $ 8.3 billion and a jump of 10% in adapted profit per share to $ 1.27. It wants to reduce its leverage to 3.8 times towards the end of the year, while it increases its dividend for the year by 2% to $ 1.17. The guidance does not include the recently announced $ 640 million outrigger Energy II -acquisition to expand its footprint in the Oil Formation bins. It said that the acquisition was done on a multiple of 8 times 2025 expected EBITDA, which would be around $ 80 billion if it owns all year round.
In the future, Kinder Morgan is planning to spend $ 2.5 billion a year on Groeicapex in the coming years, at a prior budget of $ 2 billion.
Image source: Getty images.
The Q4 results and guidance of Kinder Morgan were generally solid, but it is his strong project behind and the expected return on these projects that are exciting. In the coming years, industry expects a huge demand for natural gas and Kinder Morgan is well positioned to take advantage of these raised volumes. In addition to the increasing demand in the US arising from AI data centers, there is also a huge demand to export natural gas to Mexico and also to send them abroad.
Kinder Morgan has strong ties with the Texas Utility Market and also has pipelines near Abilene, Texas, the first data center location of the proposed $ 500 billion Stargate AI Data Center project. As such, it is in a good place to be an AI winner, because Texas seems to be the core of the AI Data Center Buildout, given the proximity of cheap associated gas from the Perm -Bekken. While the market was cleaned up on Monday by Deepseek, a new Chinese AI player whose model is said to be very cheap to train, there is still not much known about the accuracy of that claim, and I would not see this derailed on the basis of The American AI projects based on speculation.
From a rating perspective, Kinder Morgan is traded against an Enterprise Value-to-Bitda ratio of just over 11 times. This is below where Midstream companies have traded in the past and an attractive appreciation is the growth opportunities for the company. As such, Kinder Morgan is a solid stock to consider at the current level.
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Geoffrey Seiler has no position in one of the aforementioned shares. The Motley Fool has positions and recommends Kinder Morgan. The colorful fool has one disclosure policy.
