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Cheniere Energy in 2016: What's Driving the Bullish Sentiment?

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Cheniere Energy in 2016: What's Driving the Bullish Sentiment? PART 1 OF 9

How Cheniere Energy Stock Has Performed So Far in 2016

Cheniere Energy’s Market performance

Cheniere Energy (LNG) is mainly involved in activities related to LNG (liquefied natural gas) such as regasification, liquefaction, and exports. The company has declined 4.8% YTD (year-to-date).

Cheniere Energy’s two subsidiaries—Cheniere Energy Partners LP Holdings (CQH) and Cheniere Energy Partners (CQP)—have returned 14.8% and 13.4%, respectively, YTD. Cheniere Energy’s underperformance compared to its subsidiaries could be attributed to its huge leverage and the increase in natural gas prices. We’ll look at the impacts of natural gas prices on Cheniere Energy’s future earnings in a later part of this series.

How Cheniere Energy Stock Has Performed So Far in 2016

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Cheniere Energy’s peers, Energy Transfer Equity (ETE) and Kinder Morgan (KMI), have risen 4.4% and 24.1%, respectively, since the beginning of 2016. At the same time, the Alerian MLP ETF (AMLP), which comprises 24 midstream energy MLPs, has risen 5.5%. Cheniere Energy underperformed the ETF by 10.3%.

A look at Cheniere Energy’s moving averages

Cheniere Energy (LNG) is trading close to its 50-day moving average. However, it’s still trading 10% below its 200-day moving average. This might indicate a bearish trend in Cheniere Energy stock.

Cheniere Energy’s 1Q16 earnings

Cheniere Energy reported a net loss $320.8 million in 1Q16 compared to a net loss of $267.7 million in 1Q15. The increase in Cheniere Energy’s net loss was mainly due to higher interest expense, loss on early extinguishment of debt, higher impairment expense, and increased derivative losses.

In this series, we’ll take a look at Cheniere Energy’s balance sheet position and cash flow measures. After we analyze the company’S financial statements, we’ll look at its valuations, key performance indicators, commodity price exposure, and analyst projections.

Let’s start by looking at Cheniere Energy’s operating cash flow.

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