Kinder Morgan Inc. (NYSE:KMI)

The analysis of the financial metrics over the five-year period reveals several important trends.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibits a consistent upward trajectory, increasing from 2,335 million USD in 2015 to 4,396 million USD in 2019. This represents an approximate 88% increase over the period, indicating improving operational profitability and effective cost management or revenue growth.

Invested Capital

Invested capital shows a slight declining trend from 72,098 million USD in 2015 to 67,164 million USD in 2019. While the magnitude of invested capital fluctuates minimally, the downward movement suggests a possible optimization or divestment of assets.

Return on Invested Capital (ROIC)

ROIC demonstrates a continuous upward progression, rising from 3.24% in 2015 to 6.55% in 2019. This increase indicates improving efficiency in generating returns from the company's invested capital. The near doubling of ROIC over five years reflects positively on management's ability to allocate capital effectively.

Overall, the data reflects a favorable trend of growing profitability coupled with a slight reduction in invested capital, resulting in enhanced capital efficiency as evidenced by the rising ROIC. These trends suggest solid operational performance and financial discipline throughout the observed period.

Operating Profit Margin (OPM)

The operating profit margin exhibits a consistent upward trend over the five-year period. Starting from 20.38% in 2015, it increased steadily each year, reaching 37.75% by 2019. This indicates improving operational efficiency and profitability from core business activities.

Turnover of Capital (TO)

The turnover of capital remained relatively stable across the observed years, fluctuating slightly around 0.2. This suggests that the company's efficiency in using its capital to generate revenue did not significantly change during this period.

1 – Effective Cash Tax Rate (CTR)

This metric shows a rising pattern, moving from 79.53% in 2015 to 88.16% in 2019. This implies that the cash tax paid as a percentage of the pretax income increased over time, potentially impacting net profitability or cash flow.

Return on Invested Capital (ROIC)

The return on invested capital improved consistently, starting at 3.24% in 2015 and escalating to 6.55% by the end of 2019. This reflects a growing effectiveness in generating returns from the capital employed by the company.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes demonstrated a consistent upward trajectory over the five-year period. Starting at 2,936 million US dollars in 2015, it increased steadily each year, reaching 4,986 million US dollars by the end of 2019. This reflects a significant growth in operational profitability of approximately 70% over the period.

Revenues

Revenues exhibited some fluctuations during the analyzed years. Initially, revenue declined from 14,403 million US dollars in 2015 to 13,058 million US dollars in 2016. After this dip, revenues experienced a modest recovery in 2017 and 2018, peaking at 14,144 million US dollars in 2018, before dropping again to 13,209 million US dollars in 2019. Overall, revenues remained relatively stable but showed no clear upward trend.

Operating Profit Margin (OPM)

The operating profit margin showed a marked improvement throughout the period. Starting at 20.38% in 2015, it rose steadily each year to reach 37.75% in 2019. This significant increase in OPM indicates enhanced operational efficiency and better cost management, contributing to the growth in profitability despite the lack of a strong revenue increase.

Overall Analysis

The data reveals that profitability strengthened significantly between 2015 and 2019. Although revenues fluctuated without a clear growth trend, the company improved its operating profit margin, leading to higher net operating profits before taxes. This suggests successful efforts to optimize operations and control costs, resulting in improved financial performance despite revenue challenges.

Revenue Trends

Revenues displayed a fluctuating pattern over the five-year period. Starting at $14,403 million in 2015, revenues declined to $13,058 million in 2016, followed by a moderate recovery to $13,705 million in 2017 and further improvement to $14,144 million in 2018. However, in 2019, revenues again experienced a decline, falling to $13,209 million. This indicates some volatility in revenue generation without a clear consistent upward or downward trend.

Invested Capital Trends

Invested capital showed a gradual downward trend throughout the period. Beginning at $72,098 million in 2015, it decreased steadily each year to reach $67,164 million by the end of 2019. The consistent decline suggests a reduction in asset base or capital investments over time.

Turnover of Capital (TO) Trends

The turnover of capital ratio was relatively stable, fluctuating slightly but maintaining a consistent value close to 0.2 throughout the period. Starting at 0.2 in 2015, it dipped to 0.19 in 2016, then returned to 0.2 from 2017 to 2019. This stability implies consistent efficiency in utilizing invested capital to generate revenue.

Overall Insights

The combination of steadily decreasing invested capital with relatively stable capital turnover suggests maintained operational efficiency despite a shrinking capital base. The revenue fluctuations point to variability in sales or market conditions. The overall picture is one of cautious capital management with efforts to sustain revenue generation efficiency in the face of fluctuating top-line performance.

Cash Operating Taxes

The cash operating taxes show a fluctuating trend over the analyzed five-year period. Beginning at $601 million in 2015, the amount decreased significantly to $472 million in 2016, then rose moderately to $516 million in 2017. The taxes increased further to $592 million in 2018, stabilizing slightly with a marginal decrease to $590 million in 2019. Overall, the cash operating taxes exhibit variability, with a general recovery after the 2016 dip.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes demonstrates a consistent upward trend throughout the period. Starting from $2,936 million in 2015, it increased progressively each year, reaching $4,986 million in 2019. This represents a substantial growth of approximately 70% over the five years, indicating improved operational efficiency or increased revenue generation capabilities.

Effective Cash Tax Rate (CTR)

The effective cash tax rate steadily decreased from 20.47% in 2015 to 11.84% in 2019. This decline suggests that cash taxes represented a smaller portion of the net operating profit before taxes as time progressed. The most notable reduction occurred between 2015 and 2016, followed by more gradual decreases. The lowering tax rate may reflect changes in tax regulation, enhanced tax planning strategies, or shifts in the company’s earnings composition.

Summary of Observations

The data reveals expanding profitability alongside a declining effective tax rate, which collectively contribute to increasing net operating profit after cash taxes. Despite some fluctuations in the absolute cash operating taxes, the overall trend suggests improved financial performance and potentially more efficient tax management practices across the period.