Last update on 2024-06-06

Kinder Morgan (KMI) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Analyze Kinder Morgan's (KMI) financial health in 2023 using Piotroski F-Score. A score of 6/9 indicates improving metrics in profitability and liquidity.

Short Analysis - Piotroski Score: 6

We're running Kinder Morgan (KMI) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Kinder Morgan (KMI) has been evaluated based on the Piotroski F-Score, which uses 9 criteria related to profitability, liquidity, and operating efficiency. The company scored 6 out of 9. Positive points were achieved for having a positive net income ($2.39 billion in 2023), positive operating cash flow ($6.491 billion in 2023), operating cash flow higher than net income, reduced number of outstanding shares, and increased gross margin (0.5312 in 2023 compared to 0.4041 in 2022). However, the company saw a decline in ROA (from 0.0363 in 2022 to 0.0339 in 2023), an increase in leverage ratio (from 0.3952 in 2022 to 0.4053 in 2023), a reduction in the current ratio (from 0.5488 in 2022 to 0.352 in 2023), and a decrease in the asset turnover ratio (from 0.2733 in 2022 to 0.2174 in 2023). This indicates mixed results in profitability and liquidity, with areas of concern in asset efficiency and financial risk.

Insights for Value Investors Seeking Stable Income

Considering Kinder Morgan's mixed Piotroski F-Score results, it showcases decent profitability and a few favorable financial trends, making it a potentially interesting option for investors. However, the notable decline in ROA, increased leverage, lower current ratio, and reduced asset turnover ratio demand caution. If you are comfortable with these risks and believe the company can address these inefficiencies, it might be worth looking into. Otherwise, a more balanced or higher-scoring option might be preferable for lower-risk investment.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Kinder Morgan (KMI)

Company has a positive net income?

Net income represents a company's total earnings or profit, accounting for all expenses and taxes. Positive net income signifies profitability.

Kinder Morgan (KMI) has reported a net income of $2,391,000,000 for 2023, which is clearly positive. This trend is favorable as it indicates profitability and adds 1 point to the Piotroski F-Score. Over the past 20 years, the company has experienced variability in its net income, including significant losses in 2008 (-$3,599,300,000) and 2010 (-$41,300,000). However, recent years show a consistent upward trend in profitability, showcasing financial resilience and effective management strategies. Therefore, the positive net income in 2023 is a good indicator of financial health.

Company has a positive cash flow?

Cash Flow from Operations (CFO) is a critical measure of a company's financial health and liquidity.

In 2023, Kinder Morgan (KMI) reported a CFO of $6,491,000,000 — a positive value, which adds 1 point in the Piotroski score. Historically, KMI has consistently shown positive CFO over the last 20 years, beginning with $587,131,000 in 2003 and growing steadily to $6,491,000,000 in 2023. This upward trend indicates a robust operating capability, enhancing financial stability. The overall positive CFO trend exemplifies KMI's efficiency in generating sufficient cash from its regular business operations, marking this criterion as strongly favorable.

Return on Assets (ROA) are growing?

The Return on Assets (ROA) reflects how efficiently a company uses its assets to generate profit. An increasing ROA suggests better financial performance and asset usage efficiency.

In 2023, Kinder Morgan (KMI) reported a ROA of 0.0339, slightly down from 0.0363 in 2022. This decline in ROA results in a score of 0 for this criterion. Over the past two decades, the industry median ROA has shown considerable volatility, peaking at 0.4424 in 2020 and reaching lows of 0.1719 in 2012. KMI's recent ROA figures remain significantly lower than the industry median, which stood at 0.4123 in 2023. This trend indicates potential inefficiencies in asset utilization compared to its industry peers. Factors affecting KMI's ROA could include higher operational costs, suboptimal asset management, or industry-specific challenges. For a broader understanding, KMI's operating cash flow has shown a robust upward trajectory, increasing from 587 million USD in 2003 to 6.491 billion USD in 2023. Despite this, the drop in ROA raises concerns about overall asset efficiency, marking this trend as unfavorable.

Operating Cashflow are higher than Netincome?

Assessing whether Operating Cash Flow is higher than Net Income helps evaluate the quality of earnings. A higher Operating Cash Flow suggests strong core business performance and better earnings quality.

Kinder Morgan's Operating Cash Flow in 2023 stands at $6,491,000,000, markedly higher than its Net Income of $2,391,000,000. This significant difference implies strong operational performance and sound cash-generating ability. Over the past 20 years, there have been several instances where Operating Cash Flow has significantly exceeded Net Income, which indicates consistent robust business operations. Additionally, the trend in Operating Cash Flow compared to Net Income underscores prudent financial management and the ability to convert sales into cash efficiently. Thus, Kinder Morgan scores 1 point in this criterion.

Liquidity of Kinder Morgan (KMI)

Leverage is declining?

Change in leverage examines the year-over-year variation in company leverage ratios. Lower ratios suggest reduced financial risk, enhancing the firm's capability to meet obligations.

The leverage for Kinder Morgan (KMI) increased from 0.3952 in 2022 to 0.4053 in 2023, signifying an uptick in leverage. This metric, derived as (total debt/total equity), reveals growing dependency on debt, potentially heralding elevated financial risk. Historical leverage patterns fluctuate -the current rise demands closer scrutiny. Thus, KMI nets 0 points for this criterion given its higher 2023 leverage.

Current Ratio is growing?

The Current Ratio measures a company's ability to pay short-term obligations, comparing current assets to current liabilities.

Kinder Morgan's Current Ratio fell from 0.5488 in 2022 to 0.352 in 2023. This decrease in the ratio suggests that the company's ability to cover short-term obligations weakened over the year. A rising Current Ratio is generally viewed as a positive trend, indicating robust liquidity. Historically, Kinder Morgan has not maintained a consistent track record of strong liquidity, as reflected in the fluctuating ratios over the past 20 years. The industry median ratio has generally remained above 0.9, highlighting a systemic liquidity challenge within Kinder Morgan relative to its peers. This trend is concerning and can impact the confidence of creditors and investors.

Number of shares not diluted?

Shares outstanding refer to a company's stock currently held by all its shareholders. Assessing its change is vital to determine shareholder dilution or consolidation.

From 2022 to 2023, Kinder Morgan's (KMI) outstanding shares decreased from 2.258 billion to 2.234 billion. This reduction in shares suggests the company has potentially executed share buybacks or other capital actions to consolidate shares, scoring 1 point in the Piotroski Analysis. Such moves typically indicate managerial confidence in the company's intrinsic value and can enhance shareholder value by increasing earnings per share (EPS). Over a 20-year period, KMI's number of shares outstanding has shown variability with previous significant increases between 2011 and 2015, making the recent reduction a notable pivot.

Operating of Kinder Morgan (KMI)

Cross Margin is growing?

Gross Margin assesses the percentage of revenue that exceeds a company's cost of goods sold, indicating its efficiency in managing production costs.

The Gross Margin for Kinder Morgan (KMI) increased from 0.4041 in 2022 to 0.5312 in 2023, marking an improvement. Historically, Kinder Morgan’s Gross Margin has shown volatility but often outperformed the industry median. This positive change earns KMI 1 point, highlighting a trend of improved operational efficiency.

Asset Turnover Ratio is growing?

The Asset Turnover Ratio assesses how effectively a company utilizes its assets to generate sales. A higher ratio indicates better performance.

The Asset Turnover Ratio for Kinder Morgan (KMI) has decreased from 0.2733 in 2022 to 0.2174 in 2023. This decline reflects a less efficient utilization of assets in generating sales year-over-year. Examining historical data, KMI’s Asset Turnover Ratio has fluctuated, peaking at 0.5355 in 2006 and dipping as low as 0.109 in 2003. This recent decrease is not a positive trend, suggesting that the company is currently less effective in using its assets to produce revenue. Therefore, for this criterion, KMI will receive 0 points.