Wall Street Analysts Think Kinder Morgan (KMI) Is a Good Investment: Is It?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Kinder Morgan (KMI), and highlights the potential misalignment of interests between brokerage firms and retail investors [1][10]. Brokerage Recommendation Summary - Kinder Morgan has an average brokerage recommendation (ABR) of 2.00, indicating a "Buy" based on recommendations from 19 brokerage firms, with 9 "Strong Buy" and 1 "Buy" [2][5]. - Strong Buy and Buy recommendations account for 47.4% and 5.3% of all recommendations, respectively [2]. Analysis of Brokerage Recommendations - Studies indicate that brokerage recommendations may not effectively guide investors in selecting stocks with the best price increase potential [5]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, issuing five "Strong Buy" recommendations for every "Strong Sell" [6][10]. - The interests of brokerage firms may not align with those of retail investors, leading to a lack of insight into future stock price movements [7]. Zacks Rank Comparison - Zacks Rank is a proprietary stock rating tool that categorizes stocks from 1 (Strong Buy) to 5 (Strong Sell) and is based on earnings estimate revisions, showing a strong correlation with near-term stock price movements [8][11]. - Unlike ABR, Zacks Rank is a quantitative model and is updated more frequently, reflecting timely changes in earnings estimates [9][12]. Current Earnings Estimates for Kinder Morgan - The Zacks Consensus Estimate for Kinder Morgan's current year earnings remains unchanged at $1.26, suggesting steady analyst views on the company's earnings prospects [13]. - The Zacks Rank for Kinder Morgan is 3 (Hold), indicating a cautious approach despite the Buy-equivalent ABR [14].