Intrinsic value of Kinder Morgan - KMI

Previous Close

$17.93

  Intrinsic Value

$6.06

stock screener

  Rating & Target

str. sell

-66%

Previous close

$17.93

 
Intrinsic value

$6.06

 
Up/down potential

-66%

 
Rating

str. sell

We calculate the intrinsic value of KMI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 40.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -9.34
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  13,058
  13,319
  13,626
  13,976
  14,369
  14,804
  15,282
  15,803
  16,366
  16,973
  17,625
  18,321
  19,065
  19,857
  20,698
  21,591
  22,537
  23,539
  24,598
  25,717
  26,899
  28,146
  29,460
  30,846
  32,307
  33,845
  35,464
  37,169
  38,962
  40,849
  42,834
Variable operating expenses, $m
 
  11,037
  11,240
  11,472
  11,732
  12,021
  12,338
  12,682
  13,056
  13,458
  13,889
  12,135
  12,628
  13,152
  13,710
  14,301
  14,928
  15,591
  16,293
  17,034
  17,817
  18,642
  19,513
  20,431
  21,399
  22,417
  23,490
  24,619
  25,807
  27,057
  28,371
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  10,096
  11,037
  11,240
  11,472
  11,732
  12,021
  12,338
  12,682
  13,056
  13,458
  13,889
  12,135
  12,628
  13,152
  13,710
  14,301
  14,928
  15,591
  16,293
  17,034
  17,817
  18,642
  19,513
  20,431
  21,399
  22,417
  23,490
  24,619
  25,807
  27,057
  28,371
Operating income, $m
  2,962
  2,282
  2,385
  2,504
  2,636
  2,783
  2,945
  3,121
  3,311
  3,516
  3,736
  6,186
  6,437
  6,705
  6,989
  7,290
  7,610
  7,948
  8,305
  8,683
  9,082
  9,503
  9,947
  10,415
  10,908
  11,427
  11,974
  12,550
  13,155
  13,792
  14,463
EBITDA, $m
  5,171
  5,966
  6,103
  6,260
  6,436
  6,632
  6,846
  7,079
  7,331
  7,603
  7,895
  8,207
  8,540
  8,895
  9,272
  9,672
  10,095
  10,544
  11,019
  11,520
  12,049
  12,608
  13,197
  13,817
  14,472
  15,161
  15,886
  16,649
  17,453
  18,298
  19,187
Interest expense (income), $m
  2,050
  1,929
  1,975
  2,027
  2,086
  2,153
  2,227
  2,308
  2,396
  2,492
  2,595
  2,706
  2,824
  2,950
  3,084
  3,227
  3,379
  3,539
  3,709
  3,889
  4,079
  4,280
  4,491
  4,714
  4,949
  5,197
  5,458
  5,733
  6,022
  6,327
  6,647
Earnings before tax, $m
  1,638
  353
  410
  477
  550
  630
  718
  812
  914
  1,024
  1,141
  3,480
  3,613
  3,754
  3,904
  4,063
  4,231
  4,408
  4,596
  4,794
  5,003
  5,224
  5,456
  5,701
  5,959
  6,230
  6,516
  6,817
  7,133
  7,466
  7,816
Tax expense, $m
  917
  95
  111
  129
  148
  170
  194
  219
  247
  276
  308
  940
  976
  1,014
  1,054
  1,097
  1,142
  1,190
  1,241
  1,294
  1,351
  1,410
  1,473
  1,539
  1,609
  1,682
  1,759
  1,840
  1,926
  2,016
  2,110
Net income, $m
  708
  258
  300
  348
  401
  460
  524
  593
  667
  747
  833
  2,541
  2,638
  2,741
  2,850
  2,966
  3,088
  3,218
  3,355
  3,500
  3,652
  3,813
  3,983
  4,162
  4,350
  4,548
  4,757
  4,976
  5,207
  5,450
  5,705

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  684
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  80,305
  81,214
  83,082
  85,218
  87,615
  90,271
  93,185
  96,359
  99,794
  103,495
  107,467
  111,716
  116,250
  121,078
  126,209
  131,653
  137,422
  143,529
  149,988
  156,812
  164,017
  171,620
  179,637
  188,088
  196,993
  206,371
  216,245
  226,638
  237,575
  249,080
  261,182
Adjusted assets (=assets-cash), $m
  79,621
  81,214
  83,082
  85,218
  87,615
  90,271
  93,185
  96,359
  99,794
  103,495
  107,467
  111,716
  116,250
  121,078
  126,209
  131,653
  137,422
  143,529
  149,988
  156,812
  164,017
  171,620
  179,637
  188,088
  196,993
  206,371
  216,245
  226,638
  237,575
  249,080
  261,182
Revenue / Adjusted assets
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
Average production assets, $m
  43,061
  43,927
  44,937
  46,092
  47,388
  48,825
  50,401
  52,118
  53,976
  55,978
  58,126
  60,424
  62,877
  65,488
  68,263
  71,207
  74,328
  77,631
  81,124
  84,815
  88,712
  92,824
  97,161
  101,732
  106,548
  111,620
  116,961
  122,582
  128,497
  134,721
  141,266
Working capital, $m
  -2,695
  -693
  -709
  -727
  -747
  -770
  -795
  -822
  -851
  -883
  -916
  -953
  -991
  -1,033
  -1,076
  -1,123
  -1,172
  -1,224
  -1,279
  -1,337
  -1,399
  -1,464
  -1,532
  -1,604
  -1,680
  -1,760
  -1,844
  -1,933
  -2,026
  -2,124
  -2,227
Total debt, $m
  40,050
  40,306
  41,367
  42,580
  43,941
  45,450
  47,105
  48,908
  50,859
  52,961
  55,217
  57,631
  60,206
  62,948
  65,862
  68,955
  72,232
  75,701
  79,369
  83,245
  87,338
  91,656
  96,210
  101,010
  106,068
  111,395
  117,003
  122,906
  129,118
  135,654
  142,528
Total liabilities, $m
  45,874
  46,130
  47,191
  48,404
  49,765
  51,274
  52,929
  54,732
  56,683
  58,785
  61,041
  63,455
  66,030
  68,772
  71,686
  74,779
  78,056
  81,525
  85,193
  89,069
  93,162
  97,480
  102,034
  106,834
  111,892
  117,219
  122,827
  128,730
  134,942
  141,478
  148,352
Total equity, $m
  34,431
  35,085
  35,892
  36,814
  37,850
  38,997
  40,256
  41,627
  43,111
  44,710
  46,426
  48,261
  50,220
  52,306
  54,522
  56,874
  59,366
  62,005
  64,795
  67,743
  70,855
  74,140
  77,603
  81,254
  85,101
  89,152
  93,418
  97,908
  102,632
  107,603
  112,831
Total liabilities and equity, $m
  80,305
  81,215
  83,083
  85,218
  87,615
  90,271
  93,185
  96,359
  99,794
  103,495
  107,467
  111,716
  116,250
  121,078
  126,208
  131,653
  137,422
  143,530
  149,988
  156,812
  164,017
  171,620
  179,637
  188,088
  196,993
  206,371
  216,245
  226,638
  237,574
  249,081
  261,183
Debt-to-equity ratio
  1.163
  1.150
  1.150
  1.160
  1.160
  1.170
  1.170
  1.170
  1.180
  1.180
  1.190
  1.190
  1.200
  1.200
  1.210
  1.210
  1.220
  1.220
  1.220
  1.230
  1.230
  1.240
  1.240
  1.240
  1.250
  1.250
  1.250
  1.260
  1.260
  1.260
  1.260
Adjusted equity ratio
  0.424
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432
  0.432

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  708
  258
  300
  348
  401
  460
  524
  593
  667
  747
  833
  2,541
  2,638
  2,741
  2,850
  2,966
  3,088
  3,218
  3,355
  3,500
  3,652
  3,813
  3,983
  4,162
  4,350
  4,548
  4,757
  4,976
  5,207
  5,450
  5,705
Depreciation, amort., depletion, $m
  2,209
  3,684
  3,718
  3,757
  3,800
  3,848
  3,901
  3,958
  4,020
  4,087
  4,159
  2,021
  2,103
  2,190
  2,283
  2,382
  2,486
  2,596
  2,713
  2,837
  2,967
  3,104
  3,250
  3,402
  3,563
  3,733
  3,912
  4,100
  4,298
  4,506
  4,725
Funds from operations, $m
  4,612
  3,942
  4,018
  4,105
  4,202
  4,308
  4,425
  4,551
  4,688
  4,835
  4,992
  4,562
  4,741
  4,931
  5,133
  5,347
  5,574
  5,814
  6,068
  6,336
  6,619
  6,918
  7,232
  7,564
  7,913
  8,281
  8,668
  9,076
  9,505
  9,956
  10,430
Change in working capital, $m
  -175
  -14
  -16
  -18
  -20
  -23
  -25
  -27
  -29
  -32
  -34
  -36
  -39
  -41
  -44
  -46
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -89
  -93
  -98
  -103
Cash from operations, $m
  4,787
  3,956
  4,034
  4,123
  4,222
  4,331
  4,450
  4,578
  4,717
  4,866
  5,026
  4,598
  4,779
  4,972
  5,177
  5,394
  5,624
  5,867
  6,123
  6,395
  6,681
  6,983
  7,301
  7,636
  7,989
  8,361
  8,753
  9,164
  9,598
  10,054
  10,533
Maintenance CAPEX, $m
  0
  -1,440
  -1,469
  -1,503
  -1,542
  -1,585
  -1,633
  -1,686
  -1,743
  -1,805
  -1,872
  -1,944
  -2,021
  -2,103
  -2,190
  -2,283
  -2,382
  -2,486
  -2,596
  -2,713
  -2,837
  -2,967
  -3,104
  -3,250
  -3,402
  -3,563
  -3,733
  -3,912
  -4,100
  -4,298
  -4,506
New CAPEX, $m
  -2,882
  -866
  -1,010
  -1,155
  -1,297
  -1,437
  -1,576
  -1,717
  -1,858
  -2,002
  -2,148
  -2,298
  -2,452
  -2,611
  -2,775
  -2,945
  -3,121
  -3,303
  -3,493
  -3,691
  -3,897
  -4,112
  -4,337
  -4,571
  -4,816
  -5,072
  -5,341
  -5,621
  -5,915
  -6,223
  -6,546
Cash from investing activities, $m
  -1,705
  -2,306
  -2,479
  -2,658
  -2,839
  -3,022
  -3,209
  -3,403
  -3,601
  -3,807
  -4,020
  -4,242
  -4,473
  -4,714
  -4,965
  -5,228
  -5,503
  -5,789
  -6,089
  -6,404
  -6,734
  -7,079
  -7,441
  -7,821
  -8,218
  -8,635
  -9,074
  -9,533
  -10,015
  -10,521
  -11,052
Free cash flow, $m
  3,082
  1,649
  1,554
  1,465
  1,384
  1,309
  1,240
  1,176
  1,116
  1,059
  1,005
  356
  306
  258
  212
  166
  121
  77
  34
  -10
  -53
  -96
  -140
  -184
  -229
  -275
  -321
  -369
  -417
  -467
  -518
Issuance/(repayment) of debt, $m
  -1,431
  940
  1,061
  1,213
  1,362
  1,509
  1,655
  1,803
  1,951
  2,102
  2,256
  2,414
  2,575
  2,742
  2,914
  3,092
  3,277
  3,469
  3,668
  3,876
  4,092
  4,318
  4,554
  4,800
  5,058
  5,327
  5,608
  5,903
  6,212
  6,535
  6,874
Issuance/(repurchase) of shares, $m
  0
  396
  507
  574
  634
  687
  735
  778
  817
  852
  883
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,357
  1,336
  1,568
  1,787
  1,996
  2,196
  2,390
  2,581
  2,768
  2,954
  3,139
  2,414
  2,575
  2,742
  2,914
  3,092
  3,277
  3,469
  3,668
  3,876
  4,092
  4,318
  4,554
  4,800
  5,058
  5,327
  5,608
  5,903
  6,212
  6,535
  6,874
Total cash flow (excl. dividends), $m
  1,727
  2,985
  3,123
  3,252
  3,380
  3,505
  3,631
  3,757
  3,884
  4,013
  4,145
  2,769
  2,881
  3,000
  3,126
  3,258
  3,399
  3,546
  3,702
  3,866
  4,040
  4,222
  4,414
  4,616
  4,828
  5,052
  5,287
  5,535
  5,795
  6,068
  6,356
Retained Cash Flow (-), $m
  688
  -654
  -807
  -922
  -1,036
  -1,147
  -1,259
  -1,371
  -1,484
  -1,599
  -1,716
  -1,836
  -1,959
  -2,085
  -2,216
  -2,352
  -2,492
  -2,638
  -2,790
  -2,948
  -3,113
  -3,284
  -3,464
  -3,651
  -3,847
  -4,051
  -4,266
  -4,490
  -4,725
  -4,970
  -5,228
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,331
  2,316
  2,330
  2,344
  2,358
  2,372
  2,386
  2,400
  2,414
  2,429
  933
  923
  915
  909
  907
  906
  908
  912
  918
  927
  938
  950
  965
  982
  1,001
  1,022
  1,045
  1,070
  1,098
  1,128
Discount rate, %
 
  8.90
  9.35
  9.81
  10.30
  10.82
  11.36
  11.93
  12.52
  13.15
  13.81
  14.50
  15.22
  15.98
  16.78
  17.62
  18.50
  19.43
  20.40
  21.42
  22.49
  23.61
  24.80
  26.03
  27.34
  28.70
  30.14
  31.65
  33.23
  34.89
  36.63
PV of cash for distribution, $m
 
  2,141
  1,937
  1,760
  1,583
  1,411
  1,244
  1,084
  934
  794
  666
  211
  169
  133
  104
  79
  60
  44
  32
  23
  16
  11
  7
  5
  3
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  100
  99.0
  97.8
  96.5
  95.1
  93.6
  92.1
  90.6
  89.1
  87.6
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2
  86.2

Kinder Morgan, Inc. is an energy infrastructure company. It operates through five segments. Its Natural Gas Pipelines segment is engaged in the ownership and operation of interstate and intrastate natural gas pipeline and storage systems, and liquefied natural gas facilities, among others. Its CO2 segment is engaged in the production, transportation and marketing of carbon dioxide (CO2) to oil fields and the ownership and operation of a crude oil pipeline system, among others. Its Terminals segment is engaged in the ownership and/or operation of liquids and bulk terminal facilities located throughout the United States and portions of Canada, and Jones Act tankers. Its Products Pipelines segment is engaged in the ownership and operation of refined petroleum products, natural gas liquids and crude oil and condensate pipelines. Its Kinder Morgan Canada segment is engaged in the ownership and operation of the Trans Mountain pipeline system and Jet Fuel aviation turbine fuel pipeline.

FINANCIAL RATIOS  of  Kinder Morgan (KMI)

Valuation Ratios
P/E Ratio 56.5
Price to Sales 3.1
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow 21
Growth Rates
Sales Growth Rate -9.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -26%
Cap. Spend. - 3 Yr. Gr. Rate -3.1%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 108.5%
Total Debt to Equity 116.3%
Interest Coverage 2
Management Effectiveness
Return On Assets 2%
Ret/ On Assets - 3 Yr. Avg. 2%
Return On Total Capital 0.9%
Ret/ On T. Cap. - 3 Yr. Avg. 1%
Return On Equity 2%
Return On Equity - 3 Yr. Avg. 2.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 55.6%
Gross Margin - 3 Yr. Avg. 52.9%
EBITDA Margin 45.2%
EBITDA Margin - 3 Yr. Avg. 40.8%
Operating Margin 22.7%
Oper. Margin - 3 Yr. Avg. 22.3%
Pre-Tax Margin 12.5%
Pre-Tax Margin - 3 Yr. Avg. 12.3%
Net Profit Margin 5.4%
Net Profit Margin - 3 Yr. Avg. 4.5%
Effective Tax Rate 56%
Eff/ Tax Rate - 3 Yr. Avg. 50%
Payout Ratio 179.7%

KMI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KMI stock intrinsic value calculation we used $13058 million for the last fiscal year's total revenue generated by Kinder Morgan. The default revenue input number comes from 2016 income statement of Kinder Morgan. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KMI stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.9%, whose default value for KMI is calculated based on our internal credit rating of Kinder Morgan, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Kinder Morgan.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KMI stock the variable cost ratio is equal to 83.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for KMI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.9% for Kinder Morgan.

Corporate tax rate of 27% is the nominal tax rate for Kinder Morgan. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KMI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KMI are equal to 329.8%.

Life of production assets of 29.9 years is the average useful life of capital assets used in Kinder Morgan operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KMI is equal to -5.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $34431 million for Kinder Morgan - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 2233.44 million for Kinder Morgan is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Kinder Morgan at the current share price and the inputted number of shares is $40.0 billion.

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COMPANY NEWS

▶ Why Kinder Morgan Rose 2.2% Last Week   [04:00PM  Market Realist]
▶ 3 Top Pipeline Stocks to Buy Now   [Dec-10-17 11:38AM  Motley Fool]
▶ 52-Week Company Lows   [10:33AM  GuruFocus.com]
▶ Why Kinder Morgan Stock Rose 1.3% Last Week   [05:53PM  Market Realist]
▶ 2 Top Gas Stocks to Buy Now   [Dec-02-17 10:47AM  Motley Fool]
▶ Kinder Morgan Low Can be Traded   [Dec-01-17 02:36PM  TheStreet.com]
▶ 3 Top Dividend Stocks With Yields Over 3%   [06:24AM  Motley Fool]
▶ Kinder Morgan Is Down 21% Year-to-DateWhat Next?   [Nov-30-17 05:30PM  Market Realist]
▶ 52-Week Company Lows   [10:25AM  GuruFocus.com]
▶ What Do Wall Street Analysts Recommend for Kinder Morgan?   [Nov-28-17 10:32AM  Market Realist]
▶ Cramer admits his biggest investing mistakes   [Nov-27-17 07:00PM  CNBC Videos]
▶ A Look at Kinder Morgans Largest Segment   [07:32AM  Market Realist]
▶ Love Dividends? 3 Stocks You Might Want to Buy   [Nov-26-17 02:46PM  Motley Fool]
▶ 52-Week Company Lows   [10:44AM  GuruFocus.com]
▶ Kinder Morgan cuts Canadian spending expectations   [Nov-22-17 01:40PM  American City Business Journals]
▶ Cramer Remix: Amazon is the Death Star   [Nov-17-17 07:25PM  CNBC Videos]
▶ Better Buy: Enbridge Inc vs. Kinder Morgan, Inc.   [Nov-16-17 10:15AM  Motley Fool]
▶ 3 Stocks You Can Safely Own Until 2030   [Nov-15-17 08:44AM  Motley Fool]
▶ Why Canadian Crude Trades At Such A Steep Discount   [Nov-14-17 06:00PM  Oilprice.com]
▶ What Could Help Kinder Morgan Stock?   [12:45PM  Market Realist]
▶ 3 Top Energy Stocks to Buy in November   [06:02AM  Motley Fool]
▶ A Look at Targa Resources Key Upcoming Capital Projects   [Nov-08-17 07:33AM  Market Realist]
Financial statements of KMI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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