Why Cheniere Energy Has Been Outperforming AMLP and XLE in 2017


Jul. 17 2017, Updated 4:43 p.m. ET

Cheniere Energy’s market performance

Cheniere Energy (LNG) had a weak start to the month. To date, it’s fallen 1.1% in July 2017. At the same time, the Alerian MLP ETF (AMLP), which is made up of 25 energy MLPs, has risen 0.7% YTD (year-to-date).

Cheniere Energy’s recent weak performance can be attributed to the increased uncertainty in the LNG (liquefied natural gas) market after Qatar, the world’s largest LNG exporter, announced a 30% rise in its LNG capacity.

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Cheniere Energy’s YTD performance

Despite its recent weakness, Cheniere Energy has risen 16.0% since the beginning of 2017. The company has remained in the positive territory for the entirety of 2017. Cheniere Energy’s subsidiaries, Cheniere Energy Partners (CQP) and Cheniere Energy Partners LP Holdings (CQH), have risen 10.2% and 20.2%, respectively. However, Cheniere Energy and its subsidiaries are still trading below the levels they reached before the energy price rout.

Cheniere Energy’s huge YTD gains may be due to the rise in demand for US LNG from new and emerging markets, which drove the company’s spot LNG cargoes and the expected boost to LNG exports under the current government.

Cheniere Energy has been outperforming AMLP and the energy sector in general. AMLP and the Energy Select Sector SPDR ETF (XLE) have fallen 4.4% and 13.2%, respectively, in 2017. Cheniere Energy is outperforming AMLP and XLE by 2,040 and 2,920 basis points, respectively. Cheniere Energy’s outperformance relative to AMLP’s and the energy sector’s may be attributable to its stable cash flow stream from LNG shipments as uncertainty prevails in the energy sector due to the current volatility in crude oil and natural gas prices.

Series overview

In this series, we’ll take a look at the global LNG market and Cheniere Energy’s recent operating performance and balance position. Later, following an analysis of Cheniere Energy’s financials, we’ll look into its valuations, technical indicators, and analyst ratings.


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