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Cheniere Energy Is up ~5% since 1Q18 Earnings: What’s Next?

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Dec. 4 2020, Updated 10:42 a.m. ET

Cheniere Energy’s recent market performance

Cheniere Energy (LNG) has been rallying since its 1Q18 earnings announcement on May 4. The US LNG exporter is up over 5% since then. The company posted stellar earnings growth in the first quarter and increased its 2018 earnings guidance. For details, see Cheniere Energy Beats Wall Street Again, Increases 2018 Guidance.

Overall, Cheniere Energy has risen 6.6% since the start of this month. At the same time, the Energy Select Sector SPDR ETF (XLE) has gained 3.8% while the Alerian MLP ETF (AMLP) has lost 0.3%. Cheniere Energy’s strong performance could be attributed to its strong earnings and recent gains in global LNG (liquefied natural gas) prices, supported by gains in crude oil prices. We’ll look more into LNG prices in the next part of this series.

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Cheniere Energy’s historical performance

Cheniere Energy has gained 31.7% over the past year. At the same time, Cheniere Energy Partners (CQP) and Cheniere Energy Partners LP Holdings (CQH) have gained 1.2% and 11.1%. CQP’s underperformance relative to LNG and CQH could be due to its complex structure and lower liquidity.

Cheniere Energy is outperforming AMLP and XLE by over 4980 bps (basis points) and 1,922 bps, respectively, over the past year. Cheniere Energy’s outperformance relative to XLE could be due to its strong cash flow growth, protected by long-term fee-based SPAs (or sales and purchase agreements), timely completion of LNG Trains, and the addition of expansion opportunities.

Series overview

We’ll see whether Cheniere Energy can continue to gain upward momentum after a strong rally. We’ll look into the recent trend in global LNG prices, Cheniere Energy’s technical indicators, and price forecasts. Next, we’ll look into Cheniere Energy’s valuations and analyst ratings.

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