KINDER MORGAN, INC. (KMI): what the price requires

At today's price, KINDER MORGAN, INC. (KMI) is priced for +14.3% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/KMI

Headline

FieldValue
TickerKMI
CompanyKINDER MORGAN, INC.
Current price$32.37/sh
CompositionFirm services 32% / Fee-based services 16% / Natural gas sales 23% / Product sales 18% / Other sales 1% / Leasing services 9% / Derivatives adjustments on commodity sales 1% / Other 1%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basissegment
Implied growth14.3%

Solve inputs: computed at a 7.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied revenue growth ~8.3pp.

Reconcile: at the x-ray's 9.3% required return this reads ~5.3 years; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
cohort percentile (of 70 peers)79
sustained it ~5 years at this level50%
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.88x5expensive
Earnings2.01x3expensive
Relative1.03x5expensive
Growth0.74x4justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.6%); the inversion above states its own rate.

Per-Model Detail (n=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$52.440.62xyesFCF base $4.1B, growth 13% (input: historical growth), terminal g 4.0%, WACC 7.6%, 6yr projection
DCF Exit MultipleGrowth$45.460.71xyesExit EV/EBITDA: 11.9x / 13.9x / 15.9x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$31.521.03xyesP/E 20x (static sector reference · 2026-04), scenarios: 16.5x / 20.0x / 23.5x (bear / base = reference held flat / bull), EV/EBITDA 13x
Simple DDMGrowth——no—
Two-Stage DDMGrowth$41.700.78xyesStage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$16.112.01xyesBV/sh $14.08, ROE (TTM) 10.6%, ke 9.3%
Two-Stage Excess ReturnAsset$17.191.88xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$30.641.06xyesRev $17.5B, growth 13% (input: historical growth; tapered), Terminal P/S: 3.4x / 4.1x / 4.8x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$52.150.62xyesEPS $1.49, growth 35% (input: historical EPS growth), PEG=0.62 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$3.948.22xyesNormalized EBIT (5y avg op income, one-time charges added back) $3.98B × (1−22%) / WACC 7.6% → EPV (no growth)
Residual IncomeAsset$17.391.86xyesBV $14.08 + 5yr PV of (ROE (TTM) 10.6% − Kₑ 9.3%) × BV; BV grows 6.9%/yr
Graham NumberAsset$21.721.49xyes√(22.5 × EPS $1.49 × BVPS $14.08) — Graham's conservative floor
EV/EBITDA RelativeRelative$29.441.10xyesEBITDA $7.50B × sector EV/EBITDA 13.0x
FCF YieldEarnings$1.0929.70xyesFCF $3182.0M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$48.080.67xyesEPS $1.49 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$3.289.87xyesBV $14.08 × (ROIC 1.8% / WACC 7.6%)
P/Sales SectorRelative$19.691.64xyesRevenue $17.52B × sector P/S 2.5x
PEG Fair ValueRelative$55.880.58xyesEPS $1.49 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$16.112.01xyesEPS $1.49 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$32.0b
Net debt / NOPAT (after-tax)8.57x
Net debt / operating income (pre-tax)6.66x
Share count CAGR (buyback)-0.5%
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

The single number that defines Kinder Morgan is the $10.1 billion project backlog, about 92% tied to natural gas, expected to convert at roughly a 5.6x first-full-year EBITDA multiple. That backlog is the growth the price is paying for.

Q1 2026 was strong: net income of $976 million, adjusted EBITDA up 18% to $2.54 billion, and adjusted EPS of $0.48, up 41% year over year, as utilization on the five largest natural-gas pipelines topped 90% with transport volumes up 8%.

The price embeds about 16% annual operating growth for five years in the natural-gas-pipeline segment, a multiple at the very top of the midstream peer range. The cash flows are contracted and fee-based, but net debt near $32 billion means the leverage is the thing to watch.

Bull Case

Anchor the whole thesis on one metric: the share of revenue that is contracted and fee-based regardless of volume. Kinder Morgan's natural-gas business runs on long-term contracts structured with a fixed fee that reserves the right to transport or store gas, and the company receives the majority of that fee for simply making the capacity available (FY2025 10-K, accession 0001506307-26-000011). That is the take-or-pay model, and it is the number that, if it changed, would flip the verdict. As long as that fee structure holds, Kinder Morgan earns whether or not the gas actually flows, which turns a commodity-exposed asset base into something closer to a regulated toll road. It is why the segment that carries the priced-in premium is Natural Gas Pipelines, the most contracted part of the company.

The demand backdrop behind those contracts is the strongest it has been in years. Q1 2026 showed utilization above 90% on the five largest pipelines, transport volumes up 8% and gathering volumes up 15%, driving adjusted EBITDA up 18% to $2.54 billion and adjusted EPS up 41% to $0.48. The structural pull is natural gas feeding LNG exports and, increasingly, electricity generation. A peer captures the tailwind precisely: gas delivered on the system competes with other power sources, and future demand within the power sector could be increased by growing power demand (WMB FY2025 10-K, accession 0000107263-26-000006). That growing power demand is the AI-data-center build-out, and Kinder Morgan owns the largest natural-gas network in the country to serve it.

The growth is funded and visible. Management reported a $10.1 billion project backlog, about 92% natural gas, converting at a roughly 5.6x first-full-year EBITDA multiple on the remaining $8.9 billion, a high-return way to deploy capital into contracted demand. The $505 million Monument Pipeline acquisition and a Moody's upgrade to Baa1 reinforce the trajectory. Holders are paid to wait: the dividend is $1.19 annualized, a roughly 6% yield, growing with the cash flows. Against midstream peers like Williams, ONEOK, Enterprise Products, and Energy Transfer, Kinder Morgan offers scale, a fee-based contract book, and a backlog tied to the one energy molecule whose demand is accelerating. The toll-road cash flow plus the data-center pull is the bull case.

Bear Case

Begin with the qualitative disconnect, because the price has quietly moved ahead of the business. Kinder Morgan trades as if the recent surge in natural-gas demand is a permanent re-rating rather than a strong point in a cycle, and the valuation engine confirms it: the natural-gas-pipeline segment that justifies the price sits at the very top of the midstream peer distribution, well beyond the upper quartile. In plain terms, the market is paying a premium multiple for a pipeline company relative to every comparable pipeline company, on the strength of an LNG-and-data-center demand story that everyone now believes. When a regulated-style toll road is priced at the top of its sector, the easy money has been made, and the disappointment risk is asymmetric.

The numbers under that qualitative point are sobering. The reverse-DCF reads the price as embedding roughly 16% annual operating growth in the gas segment for five years, and only about 47% of comparable fast-growers have sustained that pace over a similar horizon. The static methods say the same thing from the other direction: earnings power value lands near $4, FCF yield near $1, ROIC-justified book near $3, all far below the $31.58 price (June 27, 2026), because Kinder Morgan's reported returns are thin relative to the capital invested and the depreciation on a massive asset base. Those methods are not the whole story for a fee annuity, but their distance from the price is the warning that the growth assumption is doing all the work.

The macro variable with the most leverage is rates, and the balance sheet makes it acute. Net debt sits near $32 billion, more than 6x operating income, the kind of leverage midstream carries by design but that turns hostile when refinancing costs rise. A higher-for-longer rate environment pressures the stock two ways at once: it lifts the discount rate the market applies to the bond-like dividend, and it raises the cost of funding the $10.1 billion backlog. Layer in the cyclical and weather risks management itself flagged, potential volatility in coming quarters and possible delays to LNG export-terminal expansions, and the picture is a leveraged bet on sustained gas demand priced at the top of its peer group. The 6% dividend yield is attractive, but it competes for the same cash that services the debt and funds the growth. Pay this price and you are underwriting that the demand boom keeps compounding for years.

Valuation

Lead on the segment inversion, because that is where the price is set. Kinder Morgan is valued segment by segment, and the natural-gas-pipeline business carries the priced-in premium: at $31.58 the price implies operating growth of about 16.1% per year for five years in that segment, computed at a 7.7% cost of capital. That multiple sits at the very top of the midstream peer distribution, well beyond the upper quartile, and the base rate is mixed, only about 47% of comparable fast-growers sustained that pace for five years. The engine rates its confidence in this read as high. The implication is clear: the price is a real bet on durable gas-demand growth, not a value entry.

The method families split the way a leveraged fee annuity does. The growth and relative frames reach or exceed the price, DCF perpetual growth near $53, the Peter Lynch and PEG methods in the low-to-mid $50s on strong historical EPS growth, EV/EBITDA at the sector multiple near $29, relative valuation right at $32. The asset and earnings-power frames land far below, earnings power value near $4, FCF yield near $1, residual income near $17, because depreciation on a $30-billion-plus asset base crushes reported returns.

The honest synthesis is that Kinder Morgan is fairly valued to slightly rich on the demonstrated cash flow, with meaningful upside only if the natural-gas growth thesis plays out as the backlog promises. The fee-based, take-or-pay contract structure justifies a premium to the mechanical earnings-power floor, so the low asset methods overstate the downside. But the segment multiple at the top of the peer group, plus net debt above 6x operating income, means the margin for error is thin. The 6% dividend yield pays you to hold while the backlog converts; the risk is that you paid a top-of-cycle multiple for the privilege.

Catalysts

Q1 2026 (reported April 2026) was a clear beat: net income of $976 million, adjusted EBITDA up 18% to $2.54 billion, and adjusted EPS of $0.48, up 41% year over year, ahead of the $0.44 consensus. The natural-gas-pipeline segment drove it, with utilization above 90% on the five largest pipelines, transport volumes up 8%, and gathering volumes up 15%, helped by winter weather and increased LNG deliveries. The next quarterly prints test whether the volume strength holds through the seasonally softer middle of the year.

The backlog is the central catalyst. Management reported a $10.1 billion project backlog, about 92% tied to natural gas, with the remaining $8.9 billion expected to convert at a roughly 5.6x first-full-year EBITDA multiple. Progress on those projects, plus any new contracts tied to LNG export terminals and data-center power demand, is what feeds growth beyond 2026. The $505 million Monument Pipeline acquisition and a Moody's upgrade to Baa1 are recent supportive markers.

The swing factors to watch over the next 90 days are LNG export-terminal timelines, since management flagged potential delays, weather-driven volume volatility, interest rates given net debt near $32 billion, and the dividend, declared at $0.2975 per share quarterly, or $1.19 annualized. Natural-gas demand from power generation is the structural variable that determines whether the premium multiple is earned.

Sources: StockTitan (KMI Q1 2026 8-K and 10-Q), ChartMill, Newsline, Public.com, Yahoo Finance (Q1 2026 highlights), The Motley Fool (Q1 2026 transcript).

Peer Cohorts (Per Segment, With Filing Citations)

Natural Gas Pipelines / Products Pipelines / Terminals (reported)

CO 2 (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive KMI report on boothcheck