Critical Review: Kinder Morgan (NYSE:KMI) and Frontline (NYSE:FRO)

Kinder Morgan (NYSE:KMI) and Frontline (NYSE:FRO) are both large-cap energy companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, risk, institutional ownership, valuation, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings for Kinder Morgan and Frontline, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kinder Morgan	0	11	12	0	2.52
Frontline	2	5	4	0	2.18

Kinder Morgan presently has a consensus price target of $37.20, suggesting a potential upside of 12.74%. Frontline has a consensus price target of $48.12, suggesting a potential downside of 8.54%. Given Kinder Morgan’s stronger consensus rating and higher probable upside, equities analysts plainly believe Kinder Morgan is more favorable than Frontline.

Earnings & Valuation

This table compares Kinder Morgan and Frontline”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kinder Morgan	$18.34 billion	4.01	$3.06 billion	$1.62	20.37
Frontline	$2.71 billion	4.31	$379.08 million	$6.67	7.89

Kinder Morgan has higher revenue and earnings than Frontline. Frontline is trading at a lower price-to-earnings ratio than Kinder Morgan, indicating that it is currently the more affordable of the two stocks.

Dividends

Kinder Morgan pays an annual dividend of $1.19 per share and has a dividend yield of 3.6%. Frontline pays an annual dividend of $10.44 per share and has a dividend yield of 19.8%. Kinder Morgan pays out 73.5% of its earnings in the form of a dividend. Frontline pays out 156.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kinder Morgan has raised its dividend for 9 consecutive years.

Insider and Institutional Ownership

62.5% of Kinder Morgan shares are held by institutional investors. Comparatively, 22.7% of Frontline shares are held by institutional investors. 12.7% of Kinder Morgan shares are held by company insiders. Comparatively, 48.1% of Frontline shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Kinder Morgan and Frontline’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kinder Morgan	19.64%	10.84%	4.80%
Frontline	49.47%	44.24%	20.89%

Risk & Volatility

Kinder Morgan has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500. Comparatively, Frontline has a beta of 0.15, meaning that its stock price is 85% less volatile than the S&P 500.

Summary

Kinder Morgan beats Frontline on 10 of the 17 factors compared between the two stocks.

About Kinder Morgan

Kinder Morgan, Inc. operates as an energy infrastructure company primarily in North America. The company operates through Natural Gas Pipelines, Products Pipelines, Terminals, and CO2 segments. The Natural Gas Pipelines segment owns and operates interstate and intrastate natural gas pipeline, and storage systems; natural gas gathering systems and natural gas processing and treating facilities; natural gas liquids fractionation facilities and transportation systems; and liquefied natural gas gasification, liquefaction, and storage facilities. The Products Pipelines segment owns and operates refined petroleum products, and crude oil and condensate pipelines; and associated product terminals and petroleum pipeline transmix facilities. The Terminals segment owns and/or operates liquids and bulk terminals that stores and handles various commodities, including gasoline, diesel fuel, renewable fuel and feedstocks, chemicals, ethanol, metals, and petroleum coke; and owns tankers. The CO2 segment produces, transports, and markets CO2 to recovery and production crude oil from mature oil fields; owns interests in/or operates oil fields and gasoline processing plants; and operates a crude oil pipeline system in West Texas, as well as owns and operates RNG and LNG facilities. It owns and operates approximately 82,000 miles of pipelines and 139 terminals. The company was formerly known as Kinder Morgan Holdco LLC and changed its name to Kinder Morgan, Inc. in February 2011. Kinder Morgan, Inc. was incorporated in 2006 and is headquartered in Houston, Texas.

About Frontline

Frontline plc, a shipping company, engages in the seaborne transportation of crude oil and oil products worldwide. It owns and operates oil and product tankers. As of December 31, 2022, the company operated a fleet of 70 vessels. It is also involved in the charter, purchase, and sale of vessels. The company was founded in 1985 and is based in Limassol, Cyprus.