Kinder Morgan (KMI) & Tallgrass Energy Partners, (TEP) Financial Review

Kinder Morgan (NYSE: KMI) and Tallgrass Energy Partners, (NYSE:TEP) are both mid-cap oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, valuation, earnings, risk and analyst recommendations.

Risk and Volatility

Kinder Morgan has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, Tallgrass Energy Partners, has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500.

Earnings & Valuation

This table compares Kinder Morgan and Tallgrass Energy Partners,’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kinder Morgan $13.51 billion 3.15 $6.10 billion $0.31 61.52
Tallgrass Energy Partners, $614.20 million 5.57 $351.11 million $2.23 21.17

Kinder Morgan has higher revenue and earnings than Tallgrass Energy Partners,. Tallgrass Energy Partners, is trading at a lower price-to-earnings ratio than Kinder Morgan, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Kinder Morgan and Tallgrass Energy Partners,, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kinder Morgan 0 6 12 0 2.67
Tallgrass Energy Partners, 0 5 4 0 2.44

Kinder Morgan currently has a consensus target price of $23.71, indicating a potential upside of 24.35%. Tallgrass Energy Partners, has a consensus target price of $60.57, indicating a potential upside of 28.33%. Given Tallgrass Energy Partners,’s higher probable upside, analysts plainly believe Tallgrass Energy Partners, is more favorable than Kinder Morgan.

Dividends

Kinder Morgan pays an annual dividend of $0.50 per share and has a dividend yield of 2.6%. Tallgrass Energy Partners, pays an annual dividend of $3.70 per share and has a dividend yield of 7.8%. Kinder Morgan pays out 161.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tallgrass Energy Partners, pays out 165.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kinder Morgan has increased its dividend for 3 consecutive years.

Institutional & Insider Ownership

57.7% of Kinder Morgan shares are held by institutional investors. Comparatively, 66.8% of Tallgrass Energy Partners, shares are held by institutional investors. 14.0% of Kinder Morgan shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Kinder Morgan and Tallgrass Energy Partners,’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kinder Morgan 6.20% 4.41% 1.93%
Tallgrass Energy Partners, 46.63% 20.47% 9.01%

Summary

Tallgrass Energy Partners, beats Kinder Morgan on 9 of the 17 factors compared between the two stocks.

About Kinder Morgan

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.

About Tallgrass Energy Partners,

Tallgrass Energy Partners, LP owns, operates, acquires and develops midstream energy assets in North America. The Company operates through three segments: Crude Oil Transportation & Logistics, Natural Gas Transportation & Logistics and Processing & Logistics. The Crude Oil Transportation & Logistics segment includes the ownership and operation of a Federal Energy Regulatory Commission (FERC) crude oil pipeline system, and crude oil storage and terminaling facilities. The Natural Gas Transportation & Logistics segment is engaged in the ownership and operation of FERC regulated interstate natural gas pipelines and integrated natural gas storage facilities. The Processing & Logistics segment is engaged in the ownership and operation of natural gas processing, treating and fractionation facilities; the provision of water business services primarily to the oil and gas exploration and production industry, and the transportation of natural gas liquids (NGLs).

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