Kinder Morgan, despite a recent 12.2% stock decline, remains a solid investment due to its stable business model and consistent cash flow growth. The company saw a 10.4% revenue increase in Q1 2025, driven by higher natural gas prices and increased transportation volume. Management's optimistic 2025 outlook includes significant investments in growth initiatives and a strategic acquisition, projecting higher EBITDA and cash flow.
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Kinder Morgan's stock has performed very well over the past year, returning 44% compared to the SP500 returning a slight loss over the same time frame. Key drivers include growth of LNG exports and domestic demand for natural gas, which is expected to increase by 26% through 2030 and affirmed by management in Q1 earnings. KMI transports over 40% of the natural gas in the USA and continues to build and increase its infrastructure, boasting an $8.8B backlog that is being funded primarily via earnings.
Morgan Stanley's Q1 earnings beat estimates, but emerging risks in net interest income and investment banking warrant attention. Fundamental concerns include rising provisions, asset-liability management challenges, and declining IPO volumes. Unfortunately, we see a continuation of these trends. Wealth Management shows resilience, acting as a stabilizing force, amid market volatility.
Kinder Morgan (KMI 3.24%) started the year showing only modest growth in its first quarter, although that was largely attributable to a turnaround at its condensate processing facility, which is required only once every 10 years. Nonetheless, with this maintenance work comes lost profits from the plant being shut down.
Kinder Morgan's Q1 2025 earnings showed a 10.39% revenue increase but a 3.89% net income decline, highlighting decreasing gross margins. Adjusted EBITDA rose 1% year-over-year, which is lower than some peers have delivered in recent quarters. The company has a number of natural gas projects under development. These provide the company with growth potential through at least 2029.
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Kinder Morgan beat top line estimates in Q1'25, but missed on earnings. Despite underperforming rivals in terms of dividend growth, Kinder Morgan's natural gas focus and growing EBITDA make it a solid midstream investment. The midstream platform's FY 2025 guidance implies 4% Y/Y EBITDA growth. Kinder Morgan achieves 95% of its cash flow from contracts and fee arrangements, leading to a very safe dividend.
Morgan Stanley Direct Lending Fund is a defensive BDC focusing on U.S.-based middle-market businesses with stable cash flows, low CAPEX, and diversified structures, mitigating operating risks. The portfolio's non-cyclical exposure and 96.5% first-lien debt investments ensure stability and priority in repayment, crucial during economic uncertainty. Despite trade war risks, MSDL's attractive valuation at ~0.92x Price-to-Book Value and solid income potential with a 10.5% regular DPS yield make it a compelling buy.
Morgan Stanley Direct Lending offers a high yield backed by a conservatively managed portfolio, primarily composed of first-lien secured debt. MSDL benefits from Morgan Stanley's extensive sponsor relationships and charges a below-industry-standard management fee, enhancing its appeal for value and income investors. At a 7% discount to NAV, MSDL presents an attractive investment opportunity, offering a mix of high income and value in a volatile market.
Natural gas production and demand reached record levels domestically in Q1 and are expected to continue growing, creating a dual tailwind for midstream energy operators.
Energy companies have just started to post first-quarter 2025 results, with Kinder Morgan, Inc. KMI having already reported. In the earnings release and transcript, KMI highlighted that natural gas demand will keep growing strongly in the United States and globally.