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Kinetik (KNTK)
NYSE:KNTK
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Kinetik
(NYSE:KNTK)
59Neutral
Positive Factors
Acquisitions
The acquisition of Durango Midstream has been well-received and contributes to KNTK's improved outlook.
Growth Outlook
KNTK's internal target to reach ~$2bn/yr of run-rate adj EBITDA by 2030e demonstrates a strong growth outlook.
Performance
KNTK has been a top performer in Midstream, outpacing several peers with impressive year-to-date performance.
Negative Factors
Earnings
Negative Waha prices in early November were a major driver of KNTK's 4Q24 earnings miss.
Financial Guidance
KNTK's initial FY25 guidance was lower than expected, and capex guidance was higher than anticipated.
Maintenance Issues
KNTK's 4Q24 results were weaker than expected due to maintenance issues causing volumes to settle at negative prices.
Kinetik (KNTK) vs. S&P 500 (SPY)
Market Cap
$8.08B
Dividend Yield5.97%
Average Volume (3M)974.14K
Price to Earnings (P/E)50.3
Beta (1Y)0.98
Revenue Growth21.85%
EPS Growth-54.68%
CountryUS
Employees460
SectorEnergy
Sector Strength87
IndustryOil & Gas Midstream
Share Statistics
EPS (TTM)1.01
Shares Outstanding60,078,190
10 Day Avg. Volume605,748
30 Day Avg. Volume974,138
Financial Highlights & Ratios
PEG Ratio0.22
Price to Book (P/B)N/A
Price to Sales (P/S)5.75
Price to Cash Flow (P/CF)9.70
P/FCF Ratio12.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$63.71Price Target Upside24.34% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Kinetik Business Overview & Revenue Model
Company DescriptionKinetik Holdings Inc. operates as a midstream company in the Texas Delaware Basin. It provides gathering, transportation, compression, processing, and treating services for companies that produce natural gas, natural gas liquids, crude oil, and water. The company is headquartered in Midland, Texas.
How the Company Makes MoneyKinetik makes money primarily through the fees it charges for its midstream services. The company's revenue model is centered around long-term contracts with oil and gas producers who require infrastructure to transport and process their natural gas and crude oil. Key revenue streams include service fees for natural gas gathering and processing, transportation fees for moving crude oil and natural gas through its pipeline networks, and water management services. Kinetik may also engage in joint ventures or partnerships with other energy companies to expand its infrastructure capabilities and increase its market reach. Additionally, factors such as fluctuating commodity prices, regulatory environments, and production levels in the regions it serves can significantly impact its earnings.
Kinetik Financial Statement Overview
Summary
Kinetik shows strong revenue growth and operational efficiency, but financial leverage and equity concerns pose risks. Cash flow management is a strong point, supporting operations despite income volatility. Addressing equity deficits and maintaining consistent profitability are crucial for stability.Income Statement
Kinetik has shown robust revenue growth over the years, with a notable increase from 2023 to 2024. The Gross Profit Margin is strong, reflecting efficient cost management. However, the Net Profit Margin has been inconsistent, showing fluctuations due to varying net income figures. The EBIT and EBITDA margins indicate operational efficiency, but the significant variation in net income across years suggests underlying volatility.68
Positive
Balance Sheet
The company's debt levels are high compared to its equity, reflected in the negative stockholders' equity, indicating high leverage and potential financial risk. Asset growth has been steady, but the negative equity ratio and declining ROE highlight the need for improved financial stability and profitability.50
Neutral
Cash Flow
Operating cash flow has consistently improved, indicating strong cash generation capabilities. The Free Cash Flow has shown positive growth, especially from 2023 to 2024, signifying effective capital management. The operating cash flow to net income ratio suggests robust cash conversion efficiency, although fluctuations in net income could pose potential risks.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.48B | 1.26B | 1.21B | 662.04M | 410.18M | Gross Profit |
| 538.11M | 459.70M | 411.63M | 184.87M | 121.36M | EBIT |
| 179.23M | 159.25M | 93.78M | 121.09M | -4.63M | EBITDA |
| 374.23M | 644.98M | 662.93M | 364.27M | 99.12M | Net Income Common Stockholders |
| 244.23M | 289.44M | 250.72M | 1.48M | -1.15B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 3.61M | 4.51M | 6.39M | 18.73M | 19.59M | Total Assets |
| 6.81B | 6.50B | 5.92B | 3.55B | 3.54B | Total Debt |
| 170.39M | 3.60B | 3.40B | 2.37B | 2.39B | Net Debt |
| 166.78M | 3.60B | 3.39B | 2.35B | 2.37B | Total Liabilities |
| 3.84B | 3.87B | 3.65B | 2.55B | 2.50B | Stockholders Equity |
| -2.98B | -530.82M | -839.77M | 10.00K | 937.04M |
| Cash Flow | Free Cash Flow | |||
| 361.47M | 254.93M | 391.43M | 152.86M | -96.96M | Operating Cash Flow |
| 637.35M | 584.48M | 613.01M | 235.57M | 102.10M | Investing Cash Flow |
| -176.89M | -686.32M | -286.13M | -99.62M | -505.59M | Financing Cash Flow |
| -461.36M | 99.96M | -339.21M | -136.81M | 372.77M |
Kinetik Technical Analysis
Negative
51.24
Price Trends
58.32
Negative
57.53
Negative
50.17
Positive
Market Momentum
-1.52
Negative
37.30
Neutral
17.87
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KNTK, the sentiment is Negative. The current price of 51.24 is below the 20-day moving average (MA) of 52.76, below the 50-day MA of 58.32, and above the 200-day MA of 50.17, indicating a neutral trend. The MACD of -1.52 indicates Negative momentum. The RSI at 37.30 is Neutral, neither overbought nor oversold. The STOCH value of 17.87 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KNTK.
Kinetik Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
85 Outperform | $55.26B | 12.84 | 31.78% | 6.68% | 4.30% | 10.45% | |
80 Outperform | $15.81B | 10.32 | 50.12% | 8.44% | 16.06% | 54.94% | |
77 Outperform | $64.20B | 14.57 | 13.40% | 6.87% | 5.20% | 18.35% | |
71 Outperform | $43.15B | 34.48 | 47.62% | 1.52% | 6.45% | 56.33% | |
61 Neutral | $6.72B | 63.80 | 7.26% | 3.75% | -5.94% | -63.96% | |
59 Neutral | $8.08B | 50.34 | -8.21% | 5.97% | 21.85% | -54.68% | |
58 Neutral | $9.13B | 5.39 | -7.06% | 7.50% | -0.05% | -62.88% |
* Energy Sector Average
Performance Comparison
KNTK
Kinetik
51.24
14.39
39.05%
ET
Energy Transfer
18.71
4.15
28.50%
TRGP
Targa Resources
197.82
87.84
79.87%
WES
Western Midstream Partners
41.47
8.99
27.68%
MPLX
MPLX
54.04
15.90
41.69%
ENLC
EnLink Midstream
14.12
0.84
6.33%
Kinetik Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -12.31% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
Kinetik Holdings reported substantial growth in gas processing volumes and adjusted EBITDA, driven by strategic M&A activities and operational expansions. The company successfully reduced leverage and increased dividends, reflecting strong financial performance. However, the fourth quarter faced operational challenges due to negative gas prices and maintenance activities, which were addressed with new risk measures. The outlook for 2025 remains optimistic with expected significant EBITDA growth.Highlights
Record Volume Growth
Kinetik Holdings reported record volume growth in average gas processed volumes of 1.64 billion cubic feet per day, up 13% year over year.
Increased Adjusted EBITDA
Adjusted EBITDA was $971 million, representing a 16% increase year over year, and an 18% increase when normalizing for November impacts.
Successful M&A and Expansion
Kinetik Holdings completed $1 billion in strategic and accretive transactions, including the acquisition of Durango Permian and a gas gathering and processing agreement in Eddy County.
Leverage Reduction
Leverage was reduced by nearly half a turn to 3.4 times, falling below the company’s target.
Dividend Increase
Cash dividend was increased by 4%, accelerating the return of capital to shareholders.
Positive Outlook by S&P
Kinetik Holdings was placed on a positive outlook by S&P.
2025 Growth Expectations
The company expects full-year adjusted EBITDA to grow by 15% in 2025, with a midpoint of $1.12 billion.
Lowlights
Fourth Quarter Operational Challenges
Fourth quarter results were temporarily impacted by unexpected events, including negative Waha gas prices and plant operation restrictions, resulting in a $15 million headwind.
Negative Gas Prices Impact
Negative gas prices at Waha, primarily due to scheduled maintenance on several intrastate gas pipelines, led to volume curtailments.
Exposure to Gas Market Volatility
Kinetik Holdings experienced gross margin losses due to exposure to negative Waha gas prices as a result of operating in ethane rejection.
Company Guidance
During Kinetik Holdings Inc.'s fourth quarter and full year 2024 earnings call, the company provided a detailed outlook for 2025, highlighting a 15% growth in adjusted EBITDA, projected to range between $1.09 billion and $1.15 billion. The company anticipates a significant 20% increase in gas processed volumes, driven by the startup of the King's Landing complex and recently acquired assets like Barilla Draw. Despite challenges such as a $15 million headwind from negative Waha gas prices in November, the company implemented new risk measures to stabilize operations. For 2025, capital expenditures are expected to be between $450 million and $540 million, with up to $75 million contingent on the cost of the King's Landing complex. Kinetik Holdings is also exploring a large-scale gas-fired power generation facility to manage electricity operational expenses, potentially reaching a final investment decision by year-end. The company aims for consistent growth, targeting a 10% annual EBITDA compound growth rate through 2030, while maintaining financial flexibility for organic and inorganic opportunities.Kinetik Corporate Events
Executive/Board Changes
Kinetik Announces Board Changes with New Appointment
Neutral
Jan 16, 2025
On January 15, 2025, Elizabeth Cordia resigned from the Board of Directors of Kinetik Holdings Inc. without any disagreements regarding the company’s operations or policies. She was a designee of Blackstone Energy Partners II L.P. under a Stockholders Agreement. The vacancy was filled by Karen Putterman, who was appointed by the board on the same day. Ms. Putterman, who will not receive compensation, has no material interest in transactions with the company and will enter into a standard indemnification agreement with Kinetik Holdings Inc.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.