Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Kinder Morgan, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 4.9% to 5.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 36, DPO 47, DIO 19). At a 7.0% WACC with mid-year discounting, the terminal value (75% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 9.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $25.17 per share, suggesting KMI is overvalued by 26.6% at the current price of $34.29.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 3,765 | 3,952 | 4,165 | 4,468 | 4,727 | 4,845 |
| (−) Net Interest | 1,819 | 1,909 | 2,012 | 2,159 | 2,284 | 2,341 |
| (+) D&A | 2,180 | 2,396 | 2,567 | 2,621 | 2,655 | 2,721 |
| EBITDA | 7,765 | 8,257 | 8,745 | 9,247 | 9,666 | 9,907 |
| (−) Tax | 763 | 800 | 844 | 905 | 957 | — |
| (−) CapEx | 2,360 | 2,477 | 2,611 | 2,801 | 2,963 | — |
| (−) ΔWC | -3 | 44 | 50 | 71 | 60 | — |
| Free Cash Flow (FCF) | 4,645 | 4,936 | 5,241 | 5,471 | 5,685 | — |
| Peers' EBITDA Multiple | 9.4x | |||||
| Terminal Value | 93,425 | |||||
| WACC / Discount Rate | 7.05% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 4,489 | 4,457 | 4,420 | 4,310 | 4,183 | 66,444 |
| Enterprise Value | 88,302 | |||||
| Projection Period | 21,858 | 24.8% | ||||
| Terminal Value | 66,444 | 75.2% | ||||
| (−) Current Net Debt | 32,277 | |||||
| Equity Value | 56,025 | |||||
| (÷) Outstanding Shares | 2225M | |||||
| Fair Price | $25 | -26.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 5.4x | 7.4x | 9.4x | 11.4x | 13.4x |
|---|---|---|---|---|---|
| 5.1% | $15 | $22 | $29 | $36 | $43 |
| 6.1% | $14 | $20 | $27 | $33 | $40 |
| 7.1% | $13 | $19 | $25 | $32 | $38 |
| 8.1% | $12 | $18 | $24 | $30 | $36 |
| 9.1% | $11 | $16 | $22 | $28 | $34 |
Current price: $34.29. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.