Please ensure Javascript is enabled for purposes of website accessibility

Kinder Morgan Inc Stock Continues to Rebound

By Matthew DiLallo - Jan 22, 2016 at 11:35AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Dual fuels are sending the energy infrastructure company higher today.

What: Shares of Kinder Morgan (KMI 0.54%) were up as much as 11% by 11:00 a.m. EST on Friday. Some of that rally is being fueled by the follow though of buying after the company released a solid fourth-quarter report Wednesday evening. In addition to that, the price of crude oil had jumped 6.5% to more than $31 per barrel by mid-morning, which sent nearly everything oil-related up sharply.

So what: Yesterday, analysts and investors cheered Kinder Morgan's fourth-quarter results, sending its stock up double digits. Because expectations were so low heading into the report, the company was able to handily beat analysts' estimates. Further, the company also hinted that its decision to scale back its 2016 capex spending could lead to either a stock buyback or higher a dividend before the year is out.

Another catalyst of this newfound enthusiasm in Kinder Morgan is the fact the price of oil has rebounded sharply over the past few days. Crude seemed to hit bottom, at below $28 a barrel on Wednesday, and has rallied sharply the past two days, up more than 10%. That's good news for Kinder Morgan because it has some minor exposure to the oil price, with every $1 change in the price of oil over the course of the year versus its budget impacting cash flow by $7 million. That said, for a company that's expected to produce roughly $5 billion in cash flow this year, the impact of the recent move is very minor.

Now what: Investors seem to finally realize that Kinder Morgan's exposure to the oil market downturn is rather limited. With the company recently reiterating the strength of its underlying business and cash flow, it has put an end to some of fears that had rattled investors in recent weeks.

Matt DiLallo owns shares of Kinder Morgan and has the following options: short January 2018 $30 puts on Kinder Morgan and long January 2018 $30 calls on Kinder Morgan. The Motley Fool owns shares of and recommends Kinder Morgan. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Kinder Morgan, Inc. Stock Quote
Kinder Morgan, Inc.
KMI
$18.69 (0.54%) $0.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.