Kinder Morgan Inc's (NYSE:KMI) Earnings Dropped -95.99%, Did Its Industry Show Weakness Too?

For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Kinder Morgan Inc (NYSE:KMI) useful as an attempt to give more color around how Kinder Morgan is currently performing. Check out our latest analysis for Kinder Morgan

Despite a decline, did KMI underperform the long-term trend and the industry?

I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This allows me to analyze different companies on a similar basis, using new information. For Kinder Morgan, its latest earnings (trailing twelve month) is US$22.00M, which, relative to last year’s figure, has fallen by a substantial -95.99%. Given that these values are fairly short-term, I’ve created an annualized five-year value for KMI's net income, which stands at US$713.91M This doesn’t seem to paint a better picture, as earnings seem to have consistently been declining over the longer term.

Why is this? Let's examine what's transpiring with margins and whether the whole industry is feeling the heat. Revenue growth in the last few years, has been positive, nevertheless earnings growth has been deteriorating. This suggest that Kinder Morgan has been ramping up expenses, which is harming margins and earnings, and is not a sustainable practice. Eyeballing growth from a sector-level, the US oil and gas industry has been growing its average earnings by double-digit 24.23% in the past year, . This is a turnaround from a volatile drop of -8.09% in the previous couple of years. This suggests that, in the recent industry expansion, Kinder Morgan has not been able to realize the gains unlike its industry peers.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Generally companies that endure an extended period of decline in earnings are going through some sort of reinvestment phase with the aim of keeping up with the latest industry growth and disruption. I suggest you continue to research Kinder Morgan to get a better picture of the stock by looking at the areas below. Just a heads up - to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.

• 1. Future Outlook: What are well-informed industry analysts predicting for KMI’s future growth? Take a look at this free research report of analyst consensus for KMI’s outlook.
• 2. Financial Health: Is KMI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for you. Check out important financial health checks here.
• 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.