KMI – Market expectations are for Uniform ROA to rebound, but management is concerned about production volumes and their operational initiatives

December 1, 2021

Kinder Morgan, Inc. (KMI) currently trades at a premium to Uniform assets, with a 1.7x Uniform P/B (V/A’).

At these levels, markets are pricing in expectations for Uniform ROA to rebound to a new peak of 8% in 2025, accompanied by 3% Uniform asset growth going forward.

Meanwhile, analysts expect Uniform ROA to improve to 5% by 2022, accompanied by 2% Uniform asset shrinkage.

If sustained going forward, these levels would imply a stock price closer to $3, representing significant potential equity downside for the firm.

Moreover, the firm’s most recent earnings call suggests management may have concerns about production volumes and their operational initiatives.

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