DCF Studio

    KMI · NYQ · Energy

    Kinder Morgan, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 3.60

    Market price

    USD 31.84

    Implied upside

    -88.7%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 3.60-88.7%
    Exit multiple
    USD 17.03-46.5%
    Market price
    USD 31.84

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 16.2bnUSD 15.6bnUSD 14.9bnUSD 14.3bnUSD 13.7bn-4.1%
    EBITUSD 4.3bnUSD 4.1bnUSD 4.0bnUSD 3.8bnUSD 3.6bn-4.1%
    NOPATUSD 3.4bnUSD 3.3bnUSD 3.1bnUSD 3.0bnUSD 2.9bn-4.1%
    Add depreciation & amortisationUSD 2.3bnUSD 2.2bnUSD 2.1bnUSD 2.0bnUSD 1.9bn-4.1%
    Less capital expenditureUSD -2.4bnUSD -2.3bnUSD -2.2bnUSD -2.1bnUSD -2.0bn-4.1%
    Less increase in working capitalUSD 40.8mUSD 39.1mUSD 37.5mUSD 36.0mUSD 34.5m+4.1%
    Free cashflow to firmUSD 3.3bnUSD 3.2bnUSD 3.1bnUSD 2.9bnUSD 2.8bn-4.1%
    Discount factor0.96310.89320.82850.76840.7127-
    Present valueUSD 3.2bnUSD 2.9bnUSD 2.5bnUSD 2.3bnUSD 2.0bn-11.0%
    Present Value Of The ForecastUSD 12.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.699Reported 0.551, pulled toward 1.0 (Blume)
    Cost of equity8.84%Risk-free + beta x equity risk premium
    Cost of debt7.00%Assumed: risk-free + 2bp (interest expense not reported)
    Market capitalisationUSD 70.9bn69.0% of capital
    Total debtUSD 31.8bn31.0% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.82%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 3.60

    68% of EV

    Forecast FCFF, final year
    USD 2.8bn
    Capex at depreciation, working capital in reinvestment
    USD 2.9bn
    Less reinvestment at g/ROIC (32.0% of NOPAT)
    USD -919.2m
    Capitalised
    USD 2.0bn
    ROIC (WACC floor)
    7.8%
    Terminal value, undiscounted
    USD 37.7bn
    Terminal value, discounted
    USD 26.9bn
    Enterprise value
    USD 39.7bn
    Less net debt
    USD 31.7bn
    Equity value
    USD 8.0bn

    Exit at 14.3x EBITDA

    Value per shareUSD 17.03

    82% of EV

    Terminal value, undiscounted
    USD 79.6bn
    Terminal value, discounted
    USD 56.7bn
    Enterprise value
    USD 69.6bn
    Less net debt
    USD 31.7bn
    Equity value
    USD 37.9bn

    Spread between methods: 130%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.82%9.269.349.439.529.60
    6.82%5.956.026.096.166.23
    7.82%3.483.543.603.663.71
    8.82%1.571.621.671.721.77
    9.82%0.050.090.140.180.22

    Outlined: this model. Green text: above today's price of 31.84. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-4.1%19.1%+23.2pp
    EBIT margin26.5%68.0%+41.6pp
    Discount rate7.8%4.0%-3.8pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.