Kinder Morgan (KMI): Exploring Valuation Following Jefferies' Bullish Outlook on US Natural Gas Growth

Jefferies has just initiated coverage on Kinder Morgan (NYSE:KMI), highlighting how rising demand for US natural gas and a sizable projects backlog could drive the company’s earnings growth through 2030. This outlook is sparking fresh investor interest.

See our latest analysis for Kinder Morgan.

Kinder Morgan’s latest buzz comes against a backdrop of steady momentum. While the share price has been fairly stable this year, its 12-month total shareholder return stands out at 16.2%. The long-term performance remains robust, with a remarkable 200.5% total return over five years. Recent optimism about project backlogs and natural gas demand appears to be boosting confidence in the company’s growth story.

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With Kinder Morgan trading below analyst price targets and showing a discount to intrinsic value, investors have to consider whether strong future growth remains possible, or if the market already reflects these gains.

Most Popular Narrative: 11.4% Undervalued

Kinder Morgan’s consensus narrative suggests notable upside remains compared to its latest close, with analysts drawing a clear line to higher fair value. The underlying assumptions point to ambitious growth, further motivating bulls to dig into the details.

Anticipated growth in global natural gas demand, driven by rising populations in Asia and Africa and increased energy needs from urbanization, is expected to sustain or increase utilization of Kinder Morgan's core pipeline and LNG infrastructure. This underpins long-term revenue growth through higher throughput volumes and long-term contracts.

Read the complete narrative.

Want to know the secret behind this premium valuation? The story hinges on bold revenue growth forecasts and margin expansion, hinting at a future profit jump. What key financial levers drive the fair value gap? Dig into the narrative to see the numbers behind the optimism.

Result: Fair Value of $31.06 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising debt levels and the shift toward renewable energy sources could jeopardize Kinder Morgan’s ambitious outlook and introduce volatility to future earnings.

Find out about the key risks to this Kinder Morgan narrative.

Another View: Looking Through the Lens of Multiples

While the fair value approach points to Kinder Morgan being undervalued, a closer look at its price-to-earnings ratio paints a different picture. Shares currently trade at 22.6 times earnings, well above both industry and peer averages, as well as the fair ratio of 19.3 times. This gap suggests the stock carries higher valuation risk if market sentiment shifts, despite growth optimism. Could this premium be a warning, or a sign of more confidence ahead?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Kinder Morgan Narrative

If you have a different perspective or want to dig deeper into the numbers yourself, you can easily craft your own analysis in just a few minutes by using Do it your way.

A great starting point for your Kinder Morgan research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.

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