Expect lower earnings

Cheniere Energy (LNG), a leading liquified natural gas exporter, is scheduled to report its first-quarter earnings on May 9. According to the consensus estimates, Cheniere Energy will report an EBITDA of $607.0 million for the quarter ending March 31. In the same quarter last year, the company reported an EBITDA of $856.0 million, which implies an earnings fall of almost 30% YoY (year-over-year). In 2018, Cheniere Energy’s EBITDA increased 42% YoY.

What to Expect from Cheniere Energy’s Q1 Earnings

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Cheniere Energy beat the consensus EBITDA estimates 50% of the time in the last six quarters.

Earnings drivers

Trade war uncertainties might have a negative impact on Cheniere Energy’s upcoming earnings. China has been one of the biggest consumers of liquified natural gas for the last few years due to its shift from coal to cleaner energy sources. Cheniere Energy’s management said last month that it sees a massive hike in liquefied natural gas demand from China despite trade tensions in the long term. Since 2016, Cheniere Energy has supplied 62 cargos of liquefied natural gas to China. The company has delivered three cargos to China in the first quarter.

Based on the consensus estimates, Cheniere Energy will report total revenues of $1.94 billion in the first quarter compared to $2.24 billion in the first quarter of 2018. Cheniere Energy’s revenues increased ~43% in 2018 compared to 2017.

The company’s management has given an adjusted EBITDA guidance range of $2.90 billion–$3.20 billion for 2019, which suggests an increase of more than 15% YoY.

Due to renewed trade war tensions, Cheniere Energy stock could be volatile in the short term. The stock has risen ~10%, while its MLP subsidiary Cheniere Energy Partners (CQP) has risen more than 20% in 2019.

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