Earnings Previews: IBM, Kinder Morgan, Netflix, Tesla

Energy infrastructure company Kinder Morgan Inc. (NYSE: KMI) has seen its share price increase by 2.2% over the past 12 months, including a drop of more than 5% in 2023 so far.

The company’s not-so-secret sauce for success is its generous dividend, made possible by guaranteed long-term contracts for about 60% of Kinder’s revenue. Another quarter of Kinder’s revenue is fee-based and very stable. The issue now becomes one of growth and how much the company needs to grow in order to keep paying its dividend. The company just signed on to a $251 million pipeline expansion project in the Eagle Ford natural gas play. This represents a bet that European demand for liquefied natural gas will continue after Russian pulls out of Ukraine.

Of 21 brokerages covering the stock, 15 have Hold ratings and just five have Buy or Strong Buy ratings. At a share price of around $17.00, the potential upside to a median price target of $20.00 is 17.6%. At the high price target of $23.00, the implied upside is 35.3%.

Consensus estimates call for first-quarter revenue of $4.61 billion, up 18.5% sequentially but 10.5% lower year over year, and EPS of $0.24, down 20.5% sequentially and by 11.1% year over year. For the full 2023 fiscal year, analysts forecast EPS of $1.09, down 5.7%, on sales of $18.29 billion, down 4.7%.

Kinder Morgan stock trades at 15.7 times expected 2023 EPS, 14.6 times estimated 2024 earnings of $1.17 and 14.1 times estimated 2025 earnings of $1.22. The 52-week range is $16.00 to $19.36. Kinder Morgan pays an annual dividend of $1.13 (yield of 6.57%). Total shareholder return over the past 12 months was 8.8%.

Netflix

When Netflix Inc. (NASDAQ: NFLX) reported first-quarter earnings in April, the streaming video service missed the sales estimate by about 1% and missed the profit estimate by less than 1%. Over the next two weeks, the stock dropped about 4.8%.

Since then, shares are up by nearly 42% as investors have come to see the success of the company’s ad-supported subscription plan and, especially, its crackdown on password sharing. Contrary to expectations, the end of password sharing resulted in new subscriber growth, and that growth is expected to have continued in the second quarter. Analysts expect new subscriber growth of nearly 2 million in the quarter, compared to a decline of about 1 million in the year-ago quarter.

Of 44 analysts covering the stock, 22 have a Buy or Strong Buy rating, while another 19 have Hold ratings. At a share price of around $450.00, the stock has outrun its median price target of $412.00. At the high price target of $535.00, the upside potential is about 18.9%.