Kinder Morgan Valuation in Focus After Recent Energy Sector Partnerships and 2.9% Stock Gain

• Wondering if Kinder Morgan is a bargain or if the stock’s recent momentum reflects its real value? This article breaks down how the numbers compare to what investors are paying right now.
• The stock has delivered a 2.9% gain over the past week, although it is still down 4.3% for the year. This signals both opportunities and shifting perceptions around risk and reward.
• Recent news from the energy sector has brought Kinder Morgan back into the spotlight, including new partnership announcements and regulatory updates. These developments have fueled speculation around future growth and contributed to the recent price movements, giving investors more reasons to look closely at the company’s fundamentals.
• Currently, Kinder Morgan scores 2 out of 6 on our valuation checks. This indicates there may be more to learn beneath the surface. The following section explores these valuation methods in detail for those seeking a more informed way to assess whether Kinder Morgan is truly undervalued.

Kinder Morgan scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Kinder Morgan Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company is worth by projecting its future cash flows and discounting them back to today’s value. This method focuses on how much cash the business generates and is expected to generate in the years ahead, making it popular for evaluating long-term investments like Kinder Morgan.

For Kinder Morgan, the latest available Free Cash Flow is $2.4 Billion. Based on consensus projections and Simply Wall St's extrapolations, the company’s Free Cash Flow is expected to increase steadily, reaching $4.2 Billion in 2029 and rising above $5.9 Billion by 2035. The DCF model used here utilizes a two-stage Free Cash Flow to Equity approach, with analyst forecasts covering the next five years, followed by longer-term assumptions.

Based on these cash flow projections, the estimated fair value of Kinder Morgan comes in at $49.13 per share. With the current price trading at a 45.3% discount to this calculated intrinsic value, the DCF analysis signals that the stock is significantly undervalued right now.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Kinder Morgan is undervalued by 45.3%. Track this in your watchlist or portfolio, or discover 876 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Kinder Morgan.

Approach 2: Kinder Morgan Price vs Earnings

The Price-to-Earnings (PE) ratio is widely used for valuing profitable companies like Kinder Morgan because it directly reflects how much investors are willing to pay for each dollar of current earnings. This makes it especially relevant for established, earnings-generating businesses in the oil and gas sector.

What counts as a “fair” PE ratio is not just a matter of market averages. Higher growth prospects, stronger profit margins, and lower risk typically support a higher PE, while slower growth or more uncertainty push it down. So, it is important to judge Kinder Morgan’s ratio in context.

Currently, Kinder Morgan trades at 22.06x earnings, above both the oil and gas industry average of 14.30x and the average among its direct peers at 16.74x. Simply Wall St's proprietary Fair Ratio is the multiple the company would command based on its earnings growth, risk profile, profit margins, industry dynamics, and market cap. For Kinder Morgan, this Fair Ratio comes in at 19.78x. Unlike traditional comparisons, this Fair Ratio approach is more tailored, incorporating company-specific fundamentals to determine whether the current PE aligns with what is justified for Kinder Morgan, rather than just stacking it up against the broader sector or similar businesses.

Comparing Kinder Morgan’s actual PE to its Fair Ratio suggests the stock is valued somewhat above what fundamentals would dictate, but not dramatically so.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Kinder Morgan Narrative

Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative connects the numbers to a company’s story, allowing you to express what you believe about Kinder Morgan’s future by combining your perspective on its opportunities, risks, and growth drivers with your own forecasts for key numbers like revenue, earnings, and margins.

On Simply Wall St’s Community page, millions of investors use Narratives to go beyond generic ratios by describing why they believe the stock is undervalued or overvalued, then visualizing what those beliefs mean for fair value, all in a single, accessible tool.

A Narrative links a company’s unique situation to your own financial forecast, showing at a glance if your “fair value” is above or below today’s price so you can decide whether to buy, hold, or sell. This can all update automatically when new news or earnings are released.

For example, some investors currently estimate Kinder Morgan’s fair value as high as $38 per share, expecting strong LNG export growth and regulatory support, while others see it as low as $24 per share due to high leverage and industry headwinds. This underscores how Narratives let you capture and act on your own outlook, not just consensus.

Do you think there's more to the story for Kinder Morgan? Head over to our Community to see what others are saying!

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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