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Kinder Morgan Price Challenge



December 13, 2011 – Comments (0) | RELATED TICKERS: KMP.DL

Kinder Morgan has been working hard to make some big moves in the energy world. Word has it, Kinder Morgan is priced as a real deal right now. It is now time to dig deeper and see if it really is priced to steal. Anand Chokkavelu explains how well Kinder Morgan is REALLY priced.

"The current price multiples
First, we’ll look at most investors’ favorite metric: the P/E ratio. It divides the company’s share price by its earnings per share — the lower, the better.

Then, we’ll take things up a notch with a more advanced metric: enterprise value to unlevered free cash flow. This divides the company’s enterprise value (basically, its market cap plus its debt, minus its cash) by its unlevered free cash flow (its free cash flow, adding back the interest payments on its debt). Like the P/E, the lower this number is, the better."


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