Wall Street Bulls Look Optimistic About Kinder Morgan (KMI): Should You Buy?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Kinder Morgan (KMI), and emphasizes the importance of using these recommendations in conjunction with other research tools like the Zacks Rank [1][5][10]. Brokerage Recommendations for Kinder Morgan - Kinder Morgan has an average brokerage recommendation (ABR) of 1.95, indicating a consensus between Strong Buy and Buy, based on recommendations from 20 brokerage firms [2]. - Out of the 20 recommendations, 10 are classified as Strong Buy and 1 as Buy, representing 50% and 5% of the total recommendations respectively [2]. Limitations of Brokerage Recommendations - The article highlights that relying solely on brokerage recommendations may not be wise, as studies show limited success in guiding investors to stocks with the best price increase potential [5]. - Brokerage firms often exhibit a positive bias in their ratings due to vested interests, leading to a disproportionate number of favorable ratings compared to negative ones [6][10]. Comparison with Zacks Rank - The Zacks Rank is presented as a more reliable indicator of a stock's near-term price performance, based on earnings estimate revisions rather than brokerage recommendations [8][11]. - Unlike the ABR, which is based solely on brokerage recommendations, the Zacks Rank is a quantitative model that reflects timely changes in earnings estimates [9][12]. Current Earnings Estimates for Kinder Morgan - The Zacks Consensus Estimate for Kinder Morgan's earnings for the current year remains unchanged at $1.27, suggesting stability in analysts' views regarding the company's earnings prospects [13]. - The Zacks Rank for Kinder Morgan is currently 3 (Hold), indicating a cautious approach despite the Buy-equivalent ABR [14].