Kinder Morgan's Recent Surge Justifies More Caution (Rating Downgrade)

Daniel JonesInvesting Group LeaderFollow5ShareSavePlay(12min)CommentsSummaryKinder Morgan is now rated ‘hold’ after a strong run, with limited market-beating potential at current valuation.KMI’s growth is anchored by a $10B project backlog, 90% contracted, and robust exposure to US natural gas and LNG export trends.Cash flow stability is high: 65% under take-or-pay, 26% fee-based, and a net leverage ratio of 3.8x expected to remain steady.Yield is 3.4%, competitive but not exceptional versus peers, and valuation multiples are fair but not compelling relative to competitors.Looking for a helping hand in the market? Members of Crude Value Insights get exclusive ideas and guidance to navigate any climate. Learn More » JHVEPhoto/iStock Editorial via Getty Images Even though I own shares in one of its competitors, I do think that one of the most interesting companies on the market today is Kinder Morgan, Inc. (KMI). Despite a ratherThis article was written byDaniel Jones36.91K FollowersFollowDaniel is an avid and active professional investor. He runs Crude Value Insights, a value-oriented newsletter aimed at analyzing the cash flows and assessing the value of companies in the oil and gas space. His primary focus is on finding businesses that are trading at a significant discount to their intrinsic value by employing a combination of Benjamin Graham's investment philosophy and a contrarian approach to the market and the securities therein. Learn more.Analyst’s Disclosure: I/we have a beneficial long position in the shares of ET either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.