Will Kinder Morgan Energy Partners' Earnings Crush Estimates?

The New Year is here, and earnings season has already started ramping up. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Kinder Morgan Energy Partners (NYSE: KMP). The massive midstream master limited partnership reports earnings Monday, so let's take an early look at what's been happening with the MLP over the past quarter and what we're likely to see in Monday's report.

Stats on Kinder Morgan Energy Partners

Source: Yahoo! Finance.

Will Kinder Morgan Energy Partners miss again?
Kinder Morgan Energy Partners doesn't have a great track record in meeting analyst expectations. But the stock has put in reasonable performance over the past quarter, rising just less than 3.5%.

Understanding Kinder Morgan is a bit complicated, because there are four entities you have to consider. Kinder Morgan Energy Partners and El Paso Pipeline Partners (EPB) are both midstream MLPs, with El Paso Pipeline Partners having come from Kinder Morgan's (KMI -0.32%) acquisition of El Paso last year. Since the buyout was finalized, Kinder Morgan Energy Partners has received substantial assets that used to belong to El Paso, and the MLP is the most important part of the Kinder Morgan family from an operational standpoint.

One piece of good news for Kinder Morgan came from the resolution of the fiscal cliff. Some had feared that lawmakers might take away some of the favorable tax characteristics of MLPs, leaving investors in Kinder Morgan and its peers worse off. But the eventual deal included continuing breaks for qualified dividends and didn't change MLP taxation, preserving Kinder Morgan's tax advantages.

Some investors have been concerned that the MLP's sale of its one-third interest in the Express-Platte pipeline system to Spectra Energy (SE) back in December might have an impact on Kinder Morgan Energy Partners' quarterly distributions. Yet with the asset having represented just a tiny fraction of the MLP's overall cash flow, the $380 million in cash it received in the deal will almost certainly get deployed in a way that makes up for that lost income.

Despite a history of missing quarterly estimates, Kinder Morgan Energy Partners remains a promising investment that produces solid income for investors. With healthy activity in the energy sector continuing, Kinder Morgan Energy Partners appears poised to report a good quarter.

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