- If you are wondering whether Kinetik Holdings at around US$46.66 is still offering value or starting to look fully priced, this breakdown is designed to help you frame that question clearly.
- The stock has seen a 4.0% decline over the last 7 days, a 2.0% return over the last 30 days, a 28.0% return year to date, and a 15.8% return over the last year, which can change how the market is viewing both its growth potential and its risk.
- Recent coverage around Kinetik Holdings has focused on its position within the energy sector and how investors are reacting to the share price performance over the past few years. This context helps explain why some see the recent pullback as noise while others view it as a signal to recheck the stock's underlying value.
- On Simply Wall St's valuation checks, Kinetik Holdings currently scores 4 out of 6. The rest of this article will walk through how different valuation methods stack up for the stock, and will finish with a way of looking at valuation that can give you an even richer picture.
Find out why Kinetik Holdings's 15.8% return over the last year is lagging behind its peers.
Approach 1: Kinetik Holdings Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company could be worth today by projecting its future cash flows and then discounting those back to a single present value figure.
For Kinetik Holdings, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month Free Cash Flow is about $159.4 million. Analysts have provided explicit Free Cash Flow estimates out to 2030, and Simply Wall St extends these with its own projections out to 2035. For example, projected Free Cash Flow for 2030 is $889.0 million, with intermediate years such as 2026 and 2028 sitting at $251.5 million and $677.3 million respectively.
After discounting these cash flows back to today, the DCF model arrives at an estimated intrinsic value of about $131.20 per share. Compared with the current share price of around $46.66, this calculation suggests the stock is 64.4% undervalued based on these assumptions.
Result: UNDERVALUED (on this DCF model's assumptions)
Our Discounted Cash Flow (DCF) analysis suggests Kinetik Holdings is undervalued by 64.4%. Track this in your watchlist or portfolio, or discover 59 more high quality undervalued stocks.
Approach 2: Kinetik Holdings Price vs Earnings
For a profitable company, the P/E ratio is often a useful yardstick because it connects what you pay for the stock to the earnings it is currently generating. Investors generally look for a P/E that lines up with their expectations for future growth and their comfort with the company’s risk profile, so higher growth and lower perceived risk can justify a higher multiple, while the opposite tends to pull it down.
Kinetik Holdings currently trades on a P/E of about 18.26x. That sits above the Oil and Gas industry average of 15.59x, but below the peer group average of 36.87x. Simply Wall St also calculates a proprietary “Fair Ratio” of 20.03x for Kinetik Holdings, which aims to estimate an appropriate P/E given factors such as its earnings growth profile, profit margins, industry, market capitalization and specific risks.
This Fair Ratio can offer a more tailored benchmark than a simple comparison with industry or peers because it adjusts for company specific traits rather than assuming all Oil and Gas businesses should trade on the same multiple. Compared with the current P/E of 18.26x, the Fair Ratio of 20.03x suggests Kinetik Holdings is trading at a discount on this metric.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Kinetik Holdings Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives take that idea further by letting you set out a clear story for Kinetik Holdings, link that story to specific forecasts for revenue, earnings and margins, and then see the Fair Value that falls out of those assumptions, all inside the Simply Wall St Community page that millions of investors use.
Think of a Narrative as your own Kinetik playbook. One investor might lean toward a more cautious view that lines up with a Fair Value around US$44.65, and another might lean toward a more optimistic view closer to about US$65.85. Each of those views is backed by different expectations for revenue growth, profit margins, discount rates and future P/E multiples.
This approach helps you decide whether to act by comparing your Fair Value to the current price rather than only to a single analyst target. Because Narratives are updated when new earnings, news or analyst revisions come through, your Kinetik story and its implied value stay aligned with the latest information without you needing to rebuild your model from scratch.
For Kinetik Holdings however, we will make it really easy for you with previews of two leading Kinetik Holdings Narratives:
Fair value in this bullish narrative: US$48.38 per share.
Implied pricing: around 3.6% below that fair value based on the recent price of US$46.66.
Assumed revenue growth: 11.53% a year.
- Analysts in this camp see Kinetik’s Permian gas and acid gas injection projects, along with value add services like water management, supporting recurring, higher margin revenue over several years.
- They expect revenue and earnings to rise as long duration, fee based contracts and high asset utilization offset Waha related headwinds and capital spending needs.
- The fair value view leans on higher future profit margins, a future P/E above the wider US Oil and Gas industry level, and a discount rate of about 7.1% to bring those estimates back to today.
Fair value in this cautious narrative: US$44.65 per share.
Implied pricing: around 4.5% above that fair value based on the recent price of US$46.66.
Assumed revenue growth: 3.59% a year.
- This view puts more weight on execution risks around projects like Kings Landing and ECCC, exposure to Waha pricing, and ongoing power and compression costs that could keep a lid on earnings.
- It assumes slower revenue growth, slightly lower future margins than today, and continued share count growth, which together limit earnings per share progress.
- The fair value outcome uses a discount rate of about 7.1% and a future P/E multiple in the mid 20s, with analysts in this group seeing the share price as close to fully reflecting their expectations.
If you want to see how other investors are weighing these trade offs and where they land on Kinetik’s long term story, you can review the full range of Narratives and stress test the assumptions that matter most to you using the Simply Wall St Community tools, including Curious how numbers become stories that shape markets? Explore Community Narratives.
Do you think there's more to the story for Kinetik Holdings? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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