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Analyzing Cheniere Energy’s Current Valuation

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Dec. 20 2018, Updated 3:00 p.m. ET

Valuation

Cheniere Energy (LNG) is trading at a forward EV-to-EBITDA multiple of 13.5x based on its projected earnings for 2019. Peers’ average forward valuation is ~11x. Cheniere Energy seems to be expensive compared to its peers. Cheniere Energy’s earnings are expected to grow more than 30% in 2019, according to analysts’ estimates, which is higher than many of its peers. The solid potential growth likely warrants the premium valuation.

The above chart shows Cheniere Energy’s comparative stock price movement along with the Global X MLP and Energy Infrastructure ETF (MLPX) and broader markets. So far in 2018, Cheniere Energy stock has risen more than 9%, while MLPX has fallen ~18%. Cheniere Energy forms 8.4% in MLPX.

Midstream energy giant Energy Transfer (ET) stock is trading at a forward EV-to-EBITDA multiple of 11x based on its expected earnings in 2019. Enterprise Products Partners (EPD) and Kinder Morgan (KMI) are trading at valuations of 10.8x and 9.2x, respectively.

Next, we’ll discuss where Cheniere Energy stock might go in the short term.

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