What Cheniere Energy’s Valuation Indicates after 3Q17 Earnings
Cheniere Energy’s valuation
So far in this series, we’ve looked at Cheniere Energy’s (LNG) 3Q17 financial performance, earnings guidance, and price forecasts. In this part, we’ll analyze its current valuation based on its historical and forward multiples.
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Cheniere Energy was trading at an EV1-to-sales multiple of 8.8x as of November 15, 2017. Its forward EV-to-sales multiple, which is based on the next 12-month sales estimate, was 6.3x. That’s higher than the peer median multiple of 2.4x.
Cheniere Energy’s forward EV-to-EBITDA (enterprise value to earnings before interest, depreciation, and amortization) multiple was 18.7x as of November 15, 2017. That’s below the last one-year average of 19.5x. However, it’s still higher than the peer median multiple of 11.7x.
Cheniere Energy’s low valuation compared to its last one-year average could indicate a buying opportunity, considering the increase in earnings guidance, expected commercialization of Train 6 at Sabine Pass and Train 3 at Corpus Christi, and further expansion opportunities. The company is planning to develop seven mid-scale liquefaction trains near the Corpus Christi project, each with a capacity of 1.4 mtpa (metric tons per annum).
Analyst ratings for Cheniere Energy
About 80% of analysts have rated Cheniere Energy a “buy” as of November 15, 2017, and the remaining 20% have rated it a “hold.” Its subsidiaries Cheniere Energy Partners LP Holdings (CQH) and Cheniere Energy Partners (CQP) have “hold” ratings from 60% and 53.3% of analysts, respectively. Cheniere Energy’s average target price of $56.40 implies a 14.4% upside potential from its current price level.
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- enterprise value ↩