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Cheniere Energy’s Earnings: What to Expect in Q2?


Aug. 5 2019, Published 8:38 a.m. ET

For the second quarter, Cheniere Energy’s (LNG) earnings are scheduled to be released on Thursday. According to the consensus estimates, the company will report an EPS of $0.34 for the quarter ending June 30. In the same quarter last year, Cheniere Energy reported a loss of $0.07 per share. In the first quarter, the company posted an EPS of $0.54.

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Cheniere Energy’s earnings

Cheniere Energy has shown significant earnings and cash flow growth in the last few years due to increased volumes and growth projects. The natural gas demand increased significantly mainly from China. The country is shifting its power generation away from coal. Cheniere Energy is the largest supplier of liquified natural gas in the country. The shale revolution in the country opened gates for relatively cheaper gas, which Cheniere Energy exports at competitive prices in markets overseas.

In the second quarter, Cheniere Energy’s revenues will likely be $2.15 billion. In the same quarter last year, the company reported revenues of $1.54 billion. The revenues increased approximately 40% YoY. In the last five quarters, Cheniere Energy’s revenues increased by an average of 35%.

More trade war tension might have a negative impact on Cheniere Energy’s exports. Since 2016, the company has shipped 62 cargos of liquefied natural gas to China. The company only delivered three cargos to China in the first quarter.

The company’s liquefaction platform is 85% contracted on a long-term basis, which will likely bode well for its earnings stability. Cheniere Partners (CQP), Cheniere Energy’s MLP subsidiary, placed its Train 5 in service this year. Cheniere Partners expects to make a final investment decision on Train 6 in the Corpus Christi LNG export terminal by 2020. In June, Cheniere Energy increased its annual run-rate production guidance to 4.7 million metric tons–5.0 million metric tons per train due to higher production and reduced blockages at the Sabine Pass and Corpus Christi projects. Previously, the annual run-rate production guidance was 4.4 million metric tons–4.9 million metric tons per train.

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Cheniere Partners’ increased distribution

Analysts expect Cheniere Partners’ EBITDA to increase 5% in the second quarter compared to the second quarter of 2018. Cheniere Partners increased its quarterly distribution to $0.61 per unit—a rise of 1.7% compared to the previous distribution. The company had a distribution yield of 5.4%, which is lower than the Alerian MLP ETF’s (AMLP) yield of 8.2%. Cheniere Energy stock has risen about 7%, while Cheniere Partners has risen more than 23% this year.

Currently, Cheniere Energy stock is trading in the oversold zone with its RSI (relative strength index) at 21. Analysts gave the company a mean target price of $81.6, which implies an estimated upside of nearly 29% for the next 12 months. The stock is trading at $63.5. Among the 18 analysts covering Cheniere Energy, nine recommended a “buy,” seven recommended a “strong buy,” and two recommended a “hold.” None of the analysts recommended a “sell” as of Monday.


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