Kinder Morgan Inc (KMI)

Conclusion

Kinder Morgan Inc is a North American energy infrastructure company. It operates natural gas pipelines, products pipelines, terminals and a CO2 business. At a price of 30.57 USD on 2026-11-09, its market capitalisation is 68.10 billion USD and its enterprise value is 100.26 billion USD.

The verdict is overvalued. The P/E of 18.9 is below its ten-year median of 23.0, and EV/EBITDA of 13.0 is close to its median of 12.6. P/B of 2.2 is well above its median of 1.3. The DCF gives 21.18 USD per share, and the fair value from historical multiples is 26.60 USD. The fair value band runs from 19.12 to 28.67 USD with a midpoint of 23.89 USD, a margin of safety of -21.8% at the current price. The reverse DCF implies growth of 6.7% a year. Revenue grew at 7.7% a year over five years, while free cash flow per share grew at only 0.7% a year over the same period.

What holds the case up is cash generation and earnings quality. The Piotroski score is 8 out of 9, the Beneish M-score of -2.627 points to an unlikely manipulation reading, and the operating margin of 29.0% sits above its median of 27.1%. The weakest numbers are net debt to EBITDA of 4.18, a current ratio of 0.67 and an Altman Z-score of 1.23. ROIC of 6.46% is also below WACC of 7.32%, so returns do not yet clear the cost of capital.

Financial health

Red, because three of the four assessed measures are weak: a current ratio of 0.67, net debt to EBITDA of 4.18 and an Altman Z-score of 1.23. Interest coverage of 3.01 is neutral. The quick ratio is 0.49 and debt to equity is 1.05. The Altman model was designed for manufacturers, not pipeline operators, so its distress zone is only a rough guide here. Insolvency risk: low, about 0.4% by the estimate of the Ohlson model over one to two years, based on figures as of 2025-12-31. Debt has also fallen over five years, by 9% a year on average, while revenue has grown.

Earnings quality

Green, held up by a Piotroski score of 8 out of 9, a Beneish M-score of -2.627, free cash flow conversion of 141.1% over five years and a share count that fell by 0.34% a year, which points to buybacks. Trailing twelve-month conversion is lower at 85.6%, and the accrual ratio is -0.0392. Free cash flow after stock-based compensation is 3.08 billion USD over twelve months. Stock-based compensation is not available, so its share of revenue cannot be shown. Over eight quarters the company beat earnings estimates four times and missed three times, with an average surprise of 5.2%. Current-year estimates rose 0.6% over 90 days, while next-year estimates moved 0.4% over 90 days, with expected growth of -1.6%.

Profitability

Green. Margins are above their ten-year medians: gross margin is 56.7% against 52.2%, operating margin is 29.0% against 27.1%, and net margin is 19.6% against 12.5%. Operating margin stability is 28.0%. The key weakness is returns: ROIC is 6.46% against a WACC of 7.32%, and the given ROIC minus WACC value is -0.87%, which is neutral. The five-year median ROIC is 5.37%. The DuPont split shows a net margin of 18.0%, an asset turnover of 0.23 and an equity multiplier of 2.39. Return on equity of 11.4% therefore depends heavily on leverage, not on asset efficiency.

Growth

Yellow. Revenue compound growth is -4.1% over three years, 7.7% over five years and 1.6% over ten years. Revenue grew in five of the ten comparable years. Earnings per share compound at 5.7% over three years and 76.8% over five years, but that five-year figure reflects a low base and should not be extrapolated. Free cash flow per share compound at -4.3% over three years, 0.7% over five years and 7.3% over ten years. The next-year earnings growth estimate is -1.6%, which weighs on the outlook.

Valuation

Red. The verdict is overvalued. Against ten-year medians, the P/E is 18.9 against 23.0, a premium of -18.0%. EV/EBITDA is 13.0 against 12.6, a premium of 3.2%. P/FCF is 22.1 against 19.2, a premium of 14.9%. P/S is 3.7 against 2.8, a premium of 31.9%. P/B is 2.2 against 1.3, a premium of 64.4%. The DCF gives 21.18 USD per share at a discount rate of 8.87%, and 54.2% of its value sits in the terminal value. The reverse DCF implies growth of 6.69%, against revenue growth of 7.7% over five years and free cash flow per share growth of 0.7%. The dividend yield is 3.87%, the forward yield is 3.94%, and the payout on free cash flow is 85.6%. The fair value band is built on fixed assumptions, including a 5% equity risk premium and capped growth. It is an order of magnitude, not a price target.

Risks

A net debt to EBITDA of 4.18 means debt is high relative to earnings, so refinancing or a rise in borrowing costs would squeeze cash flow. A current ratio of 0.67 means short-term obligations exceed short-term assets, which leaves little cushion. An Altman Z-score of 1.23 and an interest coverage of 3.01 signal limited room if earnings fall. ROIC below WACC means new investment must earn more to create value. Stock-based compensation and its share of revenue are not available. The analysis has no debt maturity schedule and no revenue by segment, so it cannot show when refinancing falls due or which business drives results.