Over time, a company's operational performance will determine how its stock performs. For instance, when a company trips up badly, its share price frequently declines to match the market's lowered expectations. It's thanks to one of those major stumbles that even in this rich market, Kinder Morgan (NYSE:KMI) is offering investors value for the money they're investing.

In late 2015, pipeline giant Kinder Morgan and Brookfield Infrastructure Partners (NYSE:BIP) made an offer to acquire the struggling National Gas Pipeline Company of America. That transaction added debt to Kinder Morgan's balance sheet, which spooked Moody's into placing a negative outlook on Kinder Morgan's debt rating. That drove Kinder Morgan to cut its dividend to protect its balance sheet, sending its shares into free-fall.

Pipelines in the setting sun.

Image source: Getty Images.

Once bitten, twice shy

Those who had owned Kinder Morgan solely for its once generous dividend got burned by that decision, seeing their incomes from the shares decline 75% at the same time that their stock value plummeted. That was a one-two punch that made it very hard to replace the lost income. Kinder Morgan's dividend still sits where it did after that cut, keeping away investors who view a company's dividend policy as a signal of its management's true feelings on the strength of a company.

As a result, Kinder Morgan's shares still trade for less than half where they were trading in April 2015, before the whole balance sheet kerfuffle began. Still, for investors who recognize that a company's share price should depend on its future, rather than the past, today's Kinder Morgan offers an interesting value.

Where that value is coming from

Chart showing cost vs. value, with a bullseye near 'value'

Image source: Getty Images.

Critical to the value picture is the fact that, despite the dividend cut, Kinder Morgan continues to generate billions in operating cash flow; over $4.6 billion of it over the past four reported quarters. It has put that cash flow to great use, shoring up its balance sheet to the point where Moody's no longer views it with a negative outlook. In addition, thanks to that lowered dividend, Kinder Morgan has been able to cover much of its expansion plan from operating cash flows, lowering financing costs. 

In addition, Kinder Morgan recently raised around $1.3 billion U.S. (1.75 billion Canadian dollars) in a partial initial public offering of its Canadian assets to help finance its expansion plan there. That money, plus another $4.1 billion U.S. (C$5.5 billion) the company recently raised for Canadian expansion should eventually result in even more cash flows for the company -- and ultimately, its investors.

With a market capitalization around $42 billion, Kinder Morgan is trading at around 9 times its trailing operating cash flows. With all of the money it's funneling toward its expansion plans, the odds are good that those operating cash flows should increase over time. This is especially true since 91% of Kinder Morgan's revenues come from fee-based services, giving the company great visibility to the likely revenue streams from the assets it's spending those billions building.

Speaking of that dividend...

Jars with increasing amounts of coins in them and a growing plant.

Image source: Getty Images.

While Kinder Morgan hasn't yet restored its dividend since that late 2015 cut, it has indicated it intends to revisit its dividends in late 2017 with an eye toward likely increasing them in 2018. Since Kinder Morgan's cash flow remained strong, and it used much of the money it otherwise would have put toward dividends to shore up its balance sheet, it legitimately has the potential to do so.

Of course, nothing is guaranteed unless or until Kinder Morgan actually does announce an increased dividend, but given the steps it has taken to be able to do so, chances are good that it will. Since the slashed dividend drove a large part of the company's share price decline, it's reasonable to think a restored dividend could be the start of a decent recovery in its share price, too.

A strong business plus a weak stock drives your value opportunity

Kinder Morgan has long been a cash-flow-generating titan with a "tollbooth" style business that will be in demand as long as energy is produced away from where it is needed. It remains a strong company today, but its shares reflect the past weakness of its balance sheet along with its still-stagnant dividend from the painful cut it took to shore up that balance sheet.

If the company keeps to its published expectations, we should hear within the next few months whether it believes it has strengthened its balance sheet to the point where it can resume raising its dividend. If it does, investors who buy today could find themselves owning shares as the market recognizes the operational strength that has been there throughout the balance-sheet recovery.

And if it isn't confident enough to raise its dividend by the end of this year, investors who buy today still get a reasonable valuation for its still strong operations.