Kinder Morgan Inc. (NYSE:KMI)

Return on Assets (ROA)

The Return on Assets shows a fluctuating trend throughout the observed periods. Initially, it starts with a low positive value of 0.17% in March 2016, then experiences a slight increase followed by a negative dip in September 2016 at -0.24%. It recovers steadily to peak at 1.74% in September 2017, but then declines to 0.23% in December 2017. The ROA demonstrates volatility thereafter, including a negative value of -0.32% in June 2018, before rebounding sharply to 2.04% by December 2018. The upward trend continues reaching a maximum of 3.0% in September 2019, followed by a gradual decrease to 1.81% in March 2020. Overall, ROA indicates periods of both recovery and decline, with peaks observed notably in late 2018 and mid-to-late 2019.

Financial Leverage

The Financial Leverage ratio remains relatively stable across the entire timeframe, ranging narrowly between 2.2 and 2.4. The highest values are observed in the early periods, peaking at 2.4 in June 2016. A gradual decline is noted from early 2017 onwards, reaching the lowest ratios around 2.2 in late 2019 and early 2020. This consistent leverage ratio suggests a stable approach to funding and capital structure with minor fluctuations that do not indicate significant changes in financial risk profile.

Return on Equity (ROE)

Return on Equity exhibits notable volatility, mirroring trends similar to the ROA. It begins with a modest 0.4% in March 2016, then fluctuates with a drop to -0.57% in September 2016. Subsequent quarters show recovery with peaks such as 3.97% in September 2017, although followed by a sharp decline to 0.54% by December 2017. The ROE again dips into negative territory in June 2018 at -0.76%, before a strong upward trajectory carrying through 2018 into 2019. The highest ROE levels appear in mid to late 2019, reaching 6.84% in September and maintaining relatively high levels thereafter, though declining somewhat to 4.01% by March 2020. These fluctuations suggest varying profitability and efficiency in generating equity returns over the observed periods, with a clear improvement in mid-to-late 2019.

Net Profit Margin

The net profit margin exhibits considerable volatility over the examined quarters. Initially, it fluctuates around low positive values with a notable dip to negative territory in the third quarter of 2016 (-1.47%). This is followed by a notable improvement reaching double-digit highs by late 2018 and throughout 2019, peaking at 16.58% in the fourth quarter of 2019. Despite this positive trend, there is a marked decline in the first quarter of 2020, dropping to 10.31%, indicating a contraction in profit margins relative to revenue during this period.

Asset Turnover Ratio

The asset turnover ratio is relatively stable across the time frame, consistently hovering between 0.16 and 0.19. There is a slight upward trend from 0.17 in early 2016 to around 0.18-0.19 in 2019 and early 2020. This gradual increase suggests a modest improvement in the efficiency with which the company utilizes its assets to generate sales.

Financial Leverage Ratio

Financial leverage shows a gentle decreasing trend, falling from approximately 2.39 in early 2016 to around 2.2 by early 2020. This decline indicates a modest reduction in the degree to which the company relies on debt financing relative to equity. The ratio remains relatively stable throughout, exhibiting minor fluctuations quarter to quarter without any abrupt changes.

Return on Equity (ROE)

Return on equity closely follows the patterns observed in net profit margin but remains at lower levels overall. ROE begins at minimal positive values around 0.4% in early 2016, experiences a slight downturn into negative territory in the third quarter of 2016, and then gradually improves to a peak of 6.84% in the third quarter of 2019. The year 2019 marks the strongest performance in terms of ROE. However, the first quarter of 2020 reflects a decrease to 4.01%, which still represents an acceptable return but signals a weakening compared to the prior strong quarters.

In summary, the evaluated financial metrics depict an improving profitability and operational efficiency trend through most of the period, with net profit margin and ROE showing significant enhancements particularly from 2017 through 2019. The asset turnover ratio indicates steady asset utilization efficiency, while financial leverage suggests cautious deleveraging. The decline in profitability indicators in early 2020 may warrant further examination to understand underlying causes.

Tax Burden

The tax burden ratio exhibits significant volatility throughout the periods under review. Initially low in early 2016 with values around 0.22 to 0.26, it declined sharply to a negative figure in the third quarter of 2016, before recovering to positive levels and fluctuating between 0.09 and 0.74 in subsequent quarters. From early 2019 to early 2020, the ratio remains relatively elevated, averaging above 0.6, indicating a consistently higher tax-related impact during this interval compared to earlier periods.

Interest Burden

The interest burden ratio shows relative stability with minor fluctuations over time. Starting around 0.24 to 0.26 in early 2016, it generally trends upward, peaking near 0.63 in mid to late 2019. There is a slight decline to 0.55 by the first quarter of 2020, but overall the ratio indicates moderate interest expense impact on earnings, with a subtle increase in interest burden seen over the years.

EBIT Margin

The EBIT margin demonstrates a positive trend with notable improvement over the examined quarters. Values start around 18.66% in early 2016, gradually increasing to a peak of 37.22% in late 2019. A slight decline to 30.41% occurs in early 2020. This upward movement reflects enhanced operating profitability, with some quarter-to-quarter variability but an overall strengthening in earnings before interest and taxes as a percentage of revenue.

Asset Turnover

Asset turnover remains fairly consistent throughout the period, hovering between 0.16 and 0.19. This suggests relatively stable efficiency in generating sales from assets, with no significant upward or downward trends. The minor variations observed do not indicate any material changes in operational asset utilization.

Financial Leverage

The financial leverage ratio shows a gradual decline over time, moving from about 2.39-2.40 in early 2016 to roughly 2.20-2.29 in early 2020. This indicates a slight reduction in the use of debt financing relative to equity. The trend suggests a modest deleveraging effort or changes in capital structure favoring equity during the analyzed timeframe.

Return on Equity (ROE)

Return on equity is characterized by considerable fluctuation, with some negative values in 2016 and 2018, reflecting periods of low or negative profitability. However, from early 2017 onward, the ROE generally trends upwards, reaching peaks above 6% in late 2019 before decreasing to about 4% in early 2020. The pattern indicates improving shareholder returns with some volatility and a slight pullback at the end of the period.

Net Profit Margin

The net profit margin exhibits significant fluctuations across the periods analyzed. Starting at 0.99% in the first quarter of 2016, it experienced a modest increase to 1.3% the following quarter, followed by a notable decline to -1.47% in the third quarter of 2016. A strong recovery occurred at the end of 2016, peaking at 5.42%, and this upward trend briefly continued into 2017 with values around 6%. The margin reached a notable peak of 10.38% in the third quarter of 2017 but then sharply fell to 1.34% by year-end. The first quarters of 2018 and 2019 show similar volatility, including a negative margin in the second quarter of 2018 (-1.82%). From 2019 onwards, there is a pronounced improvement, with values consistently above 11%, reaching a high of 16.58% in the fourth quarter of 2019 before declining to 10.31% in the first quarter of 2020. This pattern indicates intermittent profitability challenges, followed by periods of strong profit generation, particularly in late 2018 through 2019.

Asset Turnover

The asset turnover ratio remained relatively stable throughout the period, fluctuating narrowly between 0.16 and 0.19. Initial values in early 2016 stayed close to 0.17 and exhibited minimal variability, with a slight upward trend evidencing incremental efficiency to 0.19 in the first quarter of 2019. The ratio settled back around 0.18 towards early 2020. This stability suggests consistent utilization of assets to generate revenue, without major changes in operational efficiency over the examined timeline.

Return on Assets (ROA)

The return on assets shows a pattern closely aligned with fluctuations in net profit margin, though at lower absolute percentage levels. It began modestly at 0.17% in the first quarter of 2016, followed by a decrease to -0.24% in the third quarter of 2016, indicating a period of asset inefficiency or losses. Subsequently, moderate recovery was observed, reaching 0.88% by the end of 2016 and improving further throughout 2017. The highest ROA value occurred in the third quarter of 2019 at 3%, after a steady upward trend from 2018 (around 0.14% early in 2018 to above 2% in 2019). A slight decline occurred in early 2020 with ROA falling to 1.81%. Overall, this metric reflects improved profitability generated from asset usage over the longer term, albeit with some volatility reflective of underlying profit margin changes.

Tax Burden

The tax burden ratio demonstrates notable volatility throughout the periods, initially fluctuating between positive and negative values, with a significant dip to -0.33 in September 2016. From 2017 onwards, the ratio stabilizes largely in a positive range, peaking around 0.74 in late 2019 before declining somewhat to 0.62 in the first quarter of 2020. This pattern suggests periods of varying tax impacts on earnings, with improvement in effective tax rates over time despite occasional fluctuations.

Interest Burden

The interest burden ratio shows a general upward trend from early 2016 through late 2019, moving from approximately 0.24 to about 0.63. This indicates an improving ability to cover interest obligations through operating income over the period. However, a slight decrease to 0.55 is observed in the first quarter of 2020, suggesting a modest weakening in interest coverage at that point.

EBIT Margin

The EBIT margin displays a positive and generally increasing trajectory over the observed quarters. Starting at around 18.7% in early 2016, the margin climbs steadily, reaching a peak of approximately 37.2% in late 2019. A decline to 30.4% occurs in the first quarter of 2020. This pattern indicates improved operational profitability over time, with a temporary setback near the end of the series.

Asset Turnover

The asset turnover ratio remains relatively stable throughout the entire period, fluctuating narrowly around 0.16 to 0.19. This consistency indicates steady efficiency in utilizing assets to generate sales, with no significant improvement or deterioration in asset utilization efficiency observed.

Return on Assets (ROA)

Return on assets exhibits a highly variable pattern with negative values early in the series, notably -0.24% in September 2016 and -0.32% in June 2018, indicating losses or inefficiencies during such quarters. From late 2016 onwards, there is a recovery and upward trend with ROA peaking near 3% by mid to late 2019, reflecting enhanced asset profitability. However, a decline to 1.81% in the first quarter of 2020 suggests some reduction in asset efficiency and profitability at the latest point measured.

The analysis of the financial ratios and margins over the reported quarters reveals several notable trends in profitability and expense management.

Tax Burden (ratio)

The tax burden exhibits significant volatility throughout the timeline. Initial values from 2016 fluctuate widely, including a negative figure in September 2016, suggesting irregular tax expenses or tax credits impacting profitability. From early 2017, the ratio stabilizes, mostly staying in positive territory with peaks around 0.74 during 2019, before declining slightly to 0.62 by the first quarter of 2020. This suggests some improvement in tax efficiency or changes in tax obligations during the later periods.

Interest Burden (ratio)

The interest burden remains relatively steady but demonstrates a gradual upward trend from 0.24 in early 2016 to a high near 0.63 in late 2019, before a marginal decline to 0.55 in the first quarter of 2020. This pattern indicates an increasing proportion of earnings being retained after interest expenses over time, implying effective management of interest costs or possibly shifts in capital structure.

EBIT Margin (%)

Operating profitability as measured by the EBIT margin shows a strong and generally upward trajectory. Starting around 18.66% in early 2016, the margin rises steadily with minor fluctuations to peak at 37.22% in late 2019. Although there is a subsequent decline to 30.41% in early 2020, the overall trend indicates enhanced operational efficiency and stronger earnings relative to revenues in the analyzed period.

Net Profit Margin (%)

The net profit margin reflects high volatility with some periods displaying negative margins, particularly in late 2016 and mid-2018, suggesting episodic losses or extraordinary expenses. Despite this, from 2017 onwards there is a marked improvement, with margins increasing significantly to above 16% in much of 2019, highlighting improved net profitability. The margin dips to 10.31% in the first quarter of 2020 but remains positive and substantially higher than initial periods, indicative of better bottom-line recovery after expenses and taxes.

In summary, the company demonstrates improved operating and net profitability over the multi-year period, notwithstanding interim fluctuations. The trends suggest successful cost control and possibly favorable changes in the tax and interest environments, which contribute to enhanced earnings quality. Nevertheless, the periodic negative net margins and the variability in tax burden highlight areas that may warrant ongoing attention for stability and consistency.