2015
06/29

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Revenue

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Will Kinder Morgan Miss Revenue Estimates Again in 2Q15?

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The lower revenue estimate could be attributable to the following:

  • KMI’s CO2-based enhanced crude oil recovery and natural gas midstream businesses are exposed to commodity prices. Since crude oil (USO) and natural gas prices (UNG) have been weak, the segment’s revenues might be negatively impacted.
  • KMI is usually affected negatively in the second and the third quarters of the year due to lower demand for natural gas and NGLs (natural gas liquids) during warmer weather conditions.

Reported revenue versus consensus estimates

Kinder Morgan (KMI) beat revenue estimates in nine out of ten quarters until 3Q14 when crude oil prices started falling. After a ~6.7% miss in 4Q14, KMI missed its 1Q15 revenue estimate by a huge margin. The 1Q15 revenue estimate was ~$4.6 billion. KMI reported revenues of ~$3.6 billion, a ~21% miss. We’ll have to wait for the 2Q15 earnings release to see whether KMI beats or misses its 2Q15 revenue estimates. We’ll cover this in a post-earnings series on KMI next month.

Peer comparison

KMI’s C corporation peers the Williams Companies (WMB) and Spectra Energy Corp (SE) missed their 1Q15 revenue estimates by 26.3% and 9.4%, respectively. KMI’s MLP peers Sunoco Logistics Partners (SXL), Energy Transfer Partners (ETP), and Enterprise Products Partners (EPD) missed their 1Q15 revenue estimates by 33.9%, 29.1%, and 38.4%, respectively. KMI, WMB, and SE together make up ~9.4% of the Energy Select Sector SPDR Fund (XLE).

In the next article, we’ll analyze KMI’s 2Q15 EPS (earnings per share) estimates on similar lines.

Correction: This post originally described KMI’s reported revenues as “~$3.6 million” instead of “~$3.6 billion.” We regret this error.

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