Why Cheniere Energy Stock Is Weak despite Strong Earnings
Cheniere Energy’s market performance
Cheniere Energy (LNG) stock has been very weak over the recent trading sessions. It recovered slightly on the day following its 2Q17 earnings announcement. However, these gains were short-lived as the stock fell on the following day. The LNG (liquefied natural gas) exporter fell 9.0% in August and 15.6% since the beginning of July. Its subsidiaries, Cheniere Energy Partners (CQP) and Cheniere Energy Partners LP Holdings (CQH), have fallen 12.6% and 4.8%, respectively, in the second half of 2017 to date. The Alerian MLP ETF (AMLP), which is comprised of 25 energy MLPs, has fallen 6.8% during the same period.
Cheniere Energy’s recent weak performance could be attributed mainly to rising geopolitical tensions in North Korea and concerns of contract renegotiations due to the fall in LNG prices as a result of the supply glut.
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The recent falls have significantly eroded Cheniere Energy’s YTD (year-to-date) gains. It has entered into negative territory with a YTD loss of 0.80% as of August 10, 2017. However, Cheniere Energy is still outperforming AMLP and the energy sector in general in 2017. AMLP and the Energy Select Sector SPDR ETF (XLE) have fallen 11.5% and 14.5%, respectively, in 2017. Cheniere Energy is outperforming AMLP and XLE by 1,230 and 1,530 basis points, respectively.
Cheniere Energy’s moving averages
Cheniere Energy fell below its longer period moving average, driven by the recent falls. This might indicate a bearish sentiment in LNG. Cheniere Energy was trading 7.7% below its 200-day SMA (simple moving average) and 11.1% below its 50-day SMA as of August 10, 2017.
Cheniere Energy’s relative strength index
Cheniere Energy’s RSI (relative strength index) value was 14.5 as of August 10, 2017. It has entered the oversold territory. An RSI value below 30 for a stock indicates that it’s oversold, while an RSI value above 70 indicates that it’s overbought. The extreme RSI value for Cheniere Energy might result in a trend reversal.
Cheniere Energy’s price forecast
Cheniere Energy’s 30-day implied volatility was 29.8% as of August 10, 2017. The stock might trade in the range of $39.53–$42.93 in the next seven days based on its August 10 closing price of $41.23. Cheniere Energy stock is expected to be within this range 68.0% of the time using a standard deviation of one and assuming a normal distribution of prices.