Need To Know: Analysts Are Much More Bullish On Kinder Morgan, Inc. (NYSE:KMI) Revenues

Kinder Morgan, Inc. (NYSE:KMI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts have sharply increased their revenue numbers, with a view that Kinder Morgan will make substantially more sales than they'd previously expected.

Following the upgrade, the latest consensus from Kinder Morgan's eleven analysts is for revenues of US$19b in 2022, which would reflect a huge 22% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to surge 162% to US$1.19. Prior to this update, the analysts had been forecasting revenues of US$16b and earnings per share (EPS) of US$1.16 in 2022. The most recent forecasts are noticeably more optimistic, with a very substantial lift in revenue estimates and a lift to earnings per share as well.

See our latest analysis for Kinder Morgan

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$19.92, suggesting that the forecast performance does not have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Kinder Morgan at US$24.00 per share, while the most bearish prices it at US$17.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Kinder Morgan's rate of growth is expected to accelerate meaningfully, with the forecast 48% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 1.7% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue shrink 4.1% per year. So it's clear with the acceleration in growth, Kinder Morgan is expected to grow meaningfully faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. On the plus side, they also lifted their revenue estimates, and the company is expected to perform better than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at Kinder Morgan.

Analysts are clearly in love with Kinder Morgan at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as its declining profit margins. You can learn more, and discover the 3 other warning signs we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.