Kinder Morgan (KMI) shares have climbed sharply this month, recovering from an October 1 low of $29.48 to trade near $33.43, their highest level since late May. The stock has gained over 30% from its 2024 trough, with investor attention now fixed on the company's third-quarter earnings release due later today.
Business momentum and earnings expectations
The energy infrastructure giant, which transports natural gas and other fuels through its extensive pipeline network rather than producing them, has benefited from robust demand. Geopolitical tensions, including the US-Iran conflict, have spurred Asian and European buyers to seek US gas, while the data center boom continues to drive domestic consumption. This backdrop has supported revenue and profit growth throughout the year.
In the June quarter, Kinder Morgan reported revenue of $4.47 billion, up from $4.04 billion a year earlier, and net income rose to $894 million from $742 million. For the first half, revenue reached $9.3 billion and profits totaled $1.8 billion, prompting the board to increase shareholder dividends.
Analysts surveyed by Yahoo Finance expect the upcoming report to show revenue of $4.38 billion, a 5.72% increase year-over-year, with earnings per share of 33 cents. The market will also look for commentary on the impact of a recent pipeline outage affecting deliveries to Mexico.
Options market signals limited post-earnings volatility
Options pricing suggests a relatively subdued reaction to the earnings print, consistent with the stock's historical behavior. After its last two reports, KMI shares moved less than 2% in either direction. The current implied volatility stands at 24%, slightly above the 19% historical average, while the put-to-call ratio of 0.15 indicates bullish positioning, with most call options concentrated at the $34 strike, just above the current price.
Wall Street remains cautiously optimistic. Royal Bank of Canada has a $36 price target, Melius Research and Argus both target $38, and JPMorgan also sees $36. These targets imply modest upside from current levels.
Technical outlook points to potential breakout
From a technical perspective, KMI has broken above the $33 resistance level that capped the stock in June, July, and August. It now trades above its 100-day moving average and the Murrey Math Lines resistance, with momentum indicators like the Relative Strength Index (RSI) and MACD trending higher. If the stock can sustain this momentum, the next target is $34.47, its March high, with further upside possible toward $40.
Investors will be watching whether the earnings report and management guidance can justify the recent rally. While the options market anticipates a muted move, any surprise in revenue, profit, or the Mexico outage impact could trigger a larger reaction.
This article is for informational purposes only and does not constitute financial advice.
