Episode Details

Kinder Morgan (KMI) Q2 2026 — Kinder Morgan (KMI), the toll road on America's natural gas, reported a record Q2 2026: adjusted EPS of $0.37 beat the ~$0.32 estimate (+32% YoY) on revenue of $4.48B (+11% YoY), record adjusted EBITDA of $2.2B (+12%), and record Q2 net income of $867M (+21%). Management RAISED its full-year outlook (now >12% above budget on adjusted EPS) and declared a $0.2975 quarterly dividend ($1.19 annualized, +2% YoY, ~3.6% yield), backed by a $9.6B project backlog that is 92% natural gas. The stock (~$32.86) has run ~28% off its $25.60 low to within ~6% of its $34.81 high. Even respecting the leverage (~3.6x net debt/EBITDA) and long-run transition risk, our owner-earnings DCF lands fair value near $36 — modestly above the price. Our call: HOLD, 3/5 — a high-quality income compounder, now fairly priced. Kinder Morgan is the toll road on America's natural gas — a ~$73B energy-infrastructure company that owns ~78,000 miles of pipeline and moves roughly 40% of the gas the U.S. burns or exports. Q2 2026 was a record: adjusted EPS of $0.37 beat ~$0.32 (+32% YoY), revenue rose ~11% to $4.48B, adjusted EBITDA hit a Q2 record $2.2B (+12%), and net income of $867M was an all-time Q2 high (+21%). The engine was natural gas — transport volumes +7% on LNG exports and data-center power demand, gathering volumes +26% — and management RAISED full-year guidance (now >5% above budget on EBITDA, >12% on EPS). The dividend rose 2% to $0.2975/quarter ($1.19/yr, ~3.6% yield), covered ~2x by distributable cash flow, and a $9.6B backlog (92% natural gas, 60%+ tied to power generation and utilities) can be self-funded from internal cash. So the debate isn't quality — it's price. After a ~28% run to ~$32.86, KMI trades ~11.5x EBITDA and ~21x earnings. Respecting ~$32B of net debt (~3.6x EBITDA) and the long-run energy-transition question, our owner-earnings DCF (steady +3% vs data-center +6% paths, discounted 8-10%) lands fair value near $36 — only modestly above the price. A wonderful, boring cash machine, now fairly valued. Our call: HOLD, 3/5 — we're basically aligned with the Street's ~$35 target. Own it for the well-covered, growing yield and the LNG/data-center demand tailwind; add on real weakness in the high $20s. Not financial advice. THE CALL: HOLD (3/5, A HIGH-QUALITY TOLL ROAD, NOW FAIRLY PRICED — A RECORD BEAT-AND-RAISE WITH A THIN MARGIN OF SAFETY) — base-case value ~$36 vs ~$33 today. KEY METRICS: - Adjusted EPS $0.37, beat ~$0.32 estimate (+32% YoY); GAAP EPS $0.39 (+22%) - Revenue $4.48B (+11% YoY); record adjusted EBITDA $2.2B (+12%) - Net income attributable to KMI $867M — record Q2 (+21% YoY) - Dividend $0.2975/qtr ($1.19/yr, +2%, ~3.6% yield), covered ~2x by distributable cash flow - Project backlog $9.6B (92% natural gas, 60%+ power gen + utilities), ~5.5x first-year EBITDA, self-funded - Net debt ~$32B (~3.6x EBITDA, low end of target); raised FY26 outlook (>12% above budget on adj EPS) - Gas transport volumes +7%, gathering +26%; moves ~40% of U.S. natural gas across ~78,000 miles of pipe - Our owner-earnings DCF fair value ~$36 vs ~$33 price; Street ~$35 target — HOLD, 3/5 What to watch: hard evidence the natural-gas demand wave is accelerating — the backlog growing, more data-center and LNG transport contracts signed, and adjusted EBITDA compounding at the high end of our range — which would justify a higher multiple and prompt an upgrade; the risks to respect are a stall in gas demand, a spike in interest rates that pressures a ~$32B (leveraged) balance sheet, or a policy shift against fossil-fuel infrastructure Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.